Have you taken the Dollar Challenge hosted by 20sFinances? In case you haven’t heard of it, it’s a challenge designed to help you analyze your finances by looking at your average monthly expenses as a percentage of your monthly after-tax income. Expenses are broken down into generic categories as the results of each person that accepts this challenge will be gathered together and compared. I’m excited to see what the end results will show. Below, I discuss what my analysis revealed. Keep in mind, the results explained below is a monthly average. Also, I use a system that works for me to make managing my expenses as simple and timeless as possible.
1. Housing 16.6%
Housing is typically one of the largest expenses someone has to pay. I learned this at a very young age and have always aimed at keeping this low. This has helped me tremendously over the years to achieve many of my other goals such as traveling the world (maybe the background of this site makes more sense now ). For housing, I also included my utility expenses here.
2. Transportation 5.2%
Like housing, transportation is also typically a large expense. I have been fortunate enough to have kept the same car for about 12 years. Not having a car payment every month is a life saver. This way I have a lot of leeway in my budget for other things. Also, it allows me to set money aside each month to pay cash for my next car ,which is a great way to save on interest expense.
3. Food 10.9%
This category is for food to eat at home and I have also included going out to eat here. Reviewing my expenses has helped me identify that I used to spend quite a bit of money going out to eat. Don’t get me wrong, I still go out to eat sometimes as a treat, but now I almost always bring lunch to work, which has greatly helped keep this category low and give me money for other, more important goals I have.
4. Insurance 7.7%
This is where I have included my auto insurance and health insurance. I live in an area where there are known to be a lot of accidents, which has a direct correlation on my auto insurance expense
5. Personal Care 1.1%
Under personal care, I have included my gym membership and a few other personal care expenses. I didn’t use to have this expense as gyms were always expensive, but more recently, prices have dropped. The main reason why I justify this expense is because I go to the classes offered at the gym, which is already included in my membership. I really enjoy the classes and feel that I push myself harder with classes than I do when I have to do my own workout. I have gone to individual classes offered through private organizations, but then you have to pay for each class separately and can be expensive this way. I like the all you can eat buffet style for classes at my gym. Even if I only go a couple times a month, I still get more for my money than paying for private classes.
6. Entertainment 6.5%
I wasn’t sure where else to put my cell phone expense so I put it here. It’s on a family plan which at least makes it affordable. Also, for this category I added money spent to buy new things, such as clothes and small household items. However, I don’t spend much time at the mall , which keeps my shopping under control. But when shoes wear out, it’s time to buy new ones. This is what I use the money for. Also this money is spent when going out with friends or to a special event to have fun while living on a budget.
7. Savings 52.1%
Typically, my savings category consists of investing fund, retirement fund, traveling fund, emergency fund, and current car repair fund/new car fund. Keeping large expenses low, makes it easy to have a healthy savings account while still living life large.
8. Other 0%
I was able to classify all of my average monthly expenses in the seven categories above, making my other category 0%.
Taking the Dollar Challenge really helps put your finances in perspective. Now I challenge you to take the Dollar Challenge! Good luck!