A simple way to budget is to use the so called “60% Solution.” Try to keep all of your committed expenses at or below 60% of your income. Committed expenses include all of your bills, housing, taxes, insurance, food, clothing, charitable contributions, etc…everything that you have to pay for each month. Taxes will probably take the largest chunk of your allocation. Make sure you take the taxes taken out of your paycheck by your employer into account when calculating how you’re doing!
Split the remaining 40% of your income into four groups at 10% each for retirement, long term savings, short term savings, and fun money. If you can’t quite make 60%, take from fun money first, then short term, etc.
This method helps you to set reasonable spending limits, prioritizes your savings, and is much simpler than a formal, save every receipt, budgeting method.
This method was developed by Richard Jenkins and is outlined in more detail in his article on the subject.
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