The rest of your total income can go towards entertainment, clothes, luxuries, holidays, etc. Transportation - commuter fares or car payments, petrol, car insurance, parking, tolls, maintenanceĭebt payments and other obligations - credit card payments, student loan payments, child support and life insurance Health care - medical aid and out-of-pocket expenses (e.g. Housing - mortgage, rent, property tax, utilities (electricity, etc.), homeowners’ insurance, and ratesįood - groceries only not restaurant meals replacing a car tyre, fixing your smartphone screen, extra medical costs, maintenance of your car, etc.)ĥ0: Spend 50% of take-home pay on essential expenses Ingram warns that this fund should only be for when disaster strikes, not unplanned expenses that are necessary but not an emergency (e.g. You should have an emergency fund that can cover three to six months’ expenses. If you are not saving this amount now then arrange an annual increase in your savings.įor example, apply to increase your RA contribution by 10% next year.ĥ: Save 5% of take-home pay for short term savings Invest the 15% in a company pension plan or your own retirement annuity (RA).
Image courtesy of Maitree Rimthong Save 15% of your pre-tax salary for retirement
