This article may contain affiliate links. I may earn money from the companies mentioned in this post with no additional cost to you. Please read my disclosure policy for more info. All Bible quotations are from the New King James Version (NKJV) unless otherwise stated Bible Copyright Attribution.
Dave Ramsey is one of the most trusted experts in managing money. His financial freedom plan has helped tons of people gain control over their finances. Another one of his popular plans is Dave Ramsey Baby Steps.
Since I’ve already written an extensive post about the basic plan Dave Ramsey teaches, this post will be specifically about the Dave Ramsey budget percentages. The basic plan, I wrote about covered his baby steps and tips to save money so I highly recommend you read it.
Now that you have an understanding of Dave Ramsey’s money management plan, you can work on the Dave Ramsey budget.
Why Should You Trust the Dave Ramsey Budget?
You should be comforted in knowing that Dave Ramsey’s financial freedom principle comes from the Bible. If you study the Bible then you should know that we are warned numerous times about accumulating debt and that we shouldn’t become slaves to it.
I have not personally invested in his plan because I don’t feel like I should spend money to get out of debt. I read one of his books from the library and found that many of the principals he teaches are available for free.
I’m not saying his plan is not worth it but I do feel like a lot of people pay for his plan for the motivation and then never really follow it. Managing your money is a life long commitment. You need to make the decision to make it a part of your life so you can manage your money rather than having it manage you.
Dave Ramsey Budget Percentages
Making a budget can be difficult. Dave Ramsey has a great approach to creating a budget. We all have different incomes and expenses but he does a great job laying it out with budget percentages.
Keep in mind that these are Dave Ramsey’s recommended percentages so they aren’t really set in stone. However, they are a great guideline to start a budget. If you are just getting started then I recommend you start with Dave Ramsey’s recommended budget percentages.
Dave Ramsey recommends these budget percentages and categories to get started. These budget percentages should be calculated on your net income (after all taxes have been taken out).
If your health insurance and retirement contributions are accounted for in your paycheck make sure the amount falls in line with the budget percentages below.
- Giving – 10%
- Saving – 10%
- Food – 10 to 15%
- Utilities – 5 to 10%
- Housing – 25%
- Transportation – 10%
- Health – 5 to 10%
- Insurance – 10 to 25%
- Recreation – 5 to 10%
- Personal Spending – 5 to 10%
- Miscellaneous – 5 to 10%
Dave Ramsey Budget
This is a little more in-depth breakdown of Dave Ramey’s percentages. The budget categories are pretty straight forward but it’s important to have a full understanding of each one.
Giving – 10%
Dave Ramsey starts out his budget categories with giving. As Christians, giving should be our number one budget item. We are called to trust God and give from our hearts.
Tithing is a personal choice but it is a blessing being able to give back what the Lord has blessed us with. Everything is His.
Savings – 10%
Being prepared for our future is just as important as working to provide for our needs now. Setting money aside in an emergency fund should be your top priority. You should also be putting money away for retirement.
You may have less money to spend now but think about retirement and what a blessing it will be to have money during retirement. Social security is a bonus to your retirement. It should not be your only source of income during retirement.
Food – 10 to 15%
Food is a really easy budget item to exceed. Dave Ramsey’s food budget recommendation covers groceries and eating out. We are a family of 5 and we go through a lot of food. We have found that making our own meals at home has kept our budget percentage on track.
Planning ahead is the key to keeping your food budget on track. It takes me around an hour to plan our meals for 2 weeks. We go out to eat once a week on Sundays after church. Other than that, we eat and home.
Utilities – 5% to 10%
This Dave Ramsey percentage includes the utilities you need to run your home. The basic utilities are trash, water, electricity, and natural or propane gas. We tend to stay under in this category.
I’m pretty strict with keeping lights on and running the heater. I moved out when I was 17 years old and I learned real quick how much utilities can cost if you aren’t intentional about them. If you turn off every light when you don’t need them and keep your heater and/or air conditioner at a reasonable temperature, you shouldn’t have a problem staying in this budget percentage.
Housing – 25%
This category includes your rent or mortgage including property taxes and insurance. This is one of the biggest budget percentages and rightly so. We need a place to live.
The important thing to consider here is … what do you really need to live? We are a family of 5 and we live in a 3 bedroom house. It’s perfect for what we need. Sometimes my girls will complain about sharing a room but we have no intention of upgrading the size of our home.
A bigger house means more expenses with utilities and upkeep. It also means more cleaning which is one of my least favorite things to do. Keep these things in mind when you feel like you need to live in something above your means. It’s just not worth it.
Transporation – 10%
Having a car can get really expensive. If you are using a car to commute, you’ll need to consider the wear and tear on your car, gas prices and car insurance. This category also includes any form of transportation that you use for entertainment, trips to the store, etc.
Getting to work is important so you can make money but if your transportation costs are a huge expense to get to work, you should probably reconsider. You may be able to save money on transportation by getting involved in a carpool. It’s definitely worth looking into.
Health – 5 to 10%
Health is something you can’t foresee. Fortunately, you can be prepared in case of a health problem. It’s important to choose good health insurance that will cover most of your expenses.
This Dave Ramsey budget percentage covers medical copays, trips to urgent care, prescriptions, etc. Having money set aside every month for this is important.
The insurance category covers medical insurance, life insurance, disability insurance, etc. With health insurance, you should take into account co-pays, premiums and deductibles to find the best type of health insurance for you. Health is very important and you should make sure you are protected.
Life insurance is also very important. I stay at home and homeschool the kids so I have no source of income. It’s important for me and my husband to both have life insurance because if something happened to him, I would have no income. If something happened to me, he would need to have the kids taken care of.
Life insurance is very reasonable if you are in good health. I highly recommend you check it out.
Recreation – 5% to 10%
This includes all things you do for entertainment. Think of the things you don’t need to survive and they will most likely fall into this category. Things like TV streaming, buying or renting movies, video games, cell phones, etc.
We love being entertained so we struggle a bit in this category. We are learning to find ways to entertain ourselves at home. Instead of going to the movies, we have a movie night at home. I’ve also found some great cheap date night ideas.
Personal Spending – 5% to 10%
This budget percentage is for buying things like clothing, home decor, etc. Things that you could live without but want. Learning how to save money can get you more for less in this budget category.
You can still manage to get a lot for your money in this category if you are intentional about what you are buying. I prefer to live a frugal life because it’s easier. I’m not a big fan of getting myself things I don’t need. I just don’t enjoy it. I know some people do though.
I’d rather live simple so I don’t have to make extra decisions in the day like …which pair of jeans should I wear? If you enjoy these things, I highly recommend you learn how to save money so you can stay in this percentage. If not, then you need to learn how to stop spending money.
Miscellaneous – 5% to 10%
This is for everything that you don’t account for. It seems like something comes up every month for us and it’s nice to have a cushion for that.
If you don’t end up using this category by the end of the month, you can just put that money in savings. It’s better to have this budget category available because you never know what each day will bring.
Are Dave Ramsey’s Budget Percentages Realistic?
The Dave Ramsey budget is a great place to start when making a budget. I feel like it’s realistic. If you don’t have a budget then you won’t really know until you create one.
The truth is, most of us are living above our means. Dave Ramsey’s percentages are meant to put you back into the reality of where you should be.
Being tempted to live a lifestyle that is more than you can afford is tempting. We are constantly being bombarded with things that we don’t need. Trying to keep up with the Joneses is the wrong approach. Sit back and evaluate what you really need to survive.
What If I Have Debt Payments?
A debt category isn’t included in Dave Ramsey’s percentages because it assumes the only debt you have is your mortgage. Your goal should be to work towards only having mortgage debt.
If you have debt other than your mortgage, you need to create a budget category for that. Having debt can really limit some of your other categories. I highly recommend you get your debt paid off.
Dave Ramsey’s Household Budget
You may be wondering if having a budget is even necessary. I’m here to tell you that it is. Dave Ramsey’s household budget is a great place to start and it makes sense.
The budget percentages he has figured are similar to other budget systems but they are narrowed down a lot better. When I first started a budget, I didn’t use Dave Ramsey’s method. I basically created my budget based on what I thought.
Thankfully, I was right in line with the Dave Ramsey budget percentages. You need to start somewhere and since Dave is a Christian, I feel that he is a great resource.
Getting your budget in place does not have to be difficult. Its what we are called to do. We are to be good stewards over everything the Lord has blessed us with and money is one of those things.
God knew the struggle we would have with money and that’s why He addresses it in the Bible. We can find everything we need to know about money in the Bible.
If you are ready to get started with your budget, I highly recommend you use Dave Ramsey’s Free Budget App. I use it and it doesn’t cost me anything. If you prefer to have your budget on paper, then use these free budget spreadsheets.
Do You Use the Dave Ramsey Budget Percentages?
Budget percentages can be tricky. It’s easy to create a budget percentage for a category but making them work with your budget is another story.
I’d love to hear if the recommended budget percentages from Dave Ramsey are working for you!