Dave Ramsey’s Recommended Household Budget Percentages (+ How to Determine Your Own)

How much do you spend on groceries? How much do you spend on clothing? These are just two examples of how your budget may look. Your household budget may have different percentages for different categories. Dave Ramsey suggests that your budget should be 50% needs, 30% wants, and 20% savings.

This is a good start to help with financial planning, but what if you want to customize this for yourself? Use these steps below to help you determine your own percentages for each category. 

Dave Ramsey’s Recommended Budget Percentages

When Dave Ramsey talks about budgeting, he talks about categories. He suggests that 50% of your budget should be needed, 30% should be wanted, and 20% should be saved.

Needs are things like food, shelter, healthcare, retirement, transportation, household expenses, etc. These are necessities for life. Wants are items like clothing, electronics, entertainment, vacations/travel expenses. Savings is money set aside for emergencies and the future.

It’s important to note that Ramsey’s percentages aren’t right for everyone. It’s best to figure out what is right for you as an individual or as a family unit. For example: if you have three kids under the age of five and want to plan ahead for their college educations then your percentage may look more like 40% needs (housing), 30% wants (clothing), 10% savings (college fund) and 20% wants (vacations). This way you can save money now for a goal that will come in the future!

Dave Ramsey's Recommended Household Budget Percentages (+ How to Determine Your Own)

Determine Your Own Household Budget Percentages

The first step to creating your own budget is to determine your monthly income. The second step is to figure out how much you need each month in order to pay for basic necessities, like food and utilities. Once you’ve figured that out, you can start figuring out what percentage of your income should go into the needs category.

Here are some categories that need to be considered when determining what percentage of your budget will go into each category:

  • Housing
  • Personal care, clothing, toiletries
  • Entertainment
  • Transportations
  • Food
  • Utilities

Once you have these items figured out, you can think about the percentages for each category. You’ll want to spend 50% on needs. To achieve this, you will need to cut back on other parts of the budget–for example entertainment or personal care. You may also want to keep 20% in savings for emergencies or future expenses. You should also keep 30% for wants or items that will bring joy into your life–such as a new outfit or an evening out with friends. Finally, 10% should go towards debt repayment and savings goals.

 Consider Your Spending Habits

One of the first steps is to think about your spending habits. What are you spending most of your money on? Are there areas where you’re buying more than you need? As an example, if you spend a lot on eating out, maybe your budget would be 75% needs, 20% wants, and 5% savings.

It’s important to think about these things so you can determine what percentages best fit what is actually happening in your life right now.

 Determine What Each Category Means to You

The first step to customizing your budget is to figure out what needs, wants, and savings means to you.

Needs: These are essential expenses that should not be overlooked. They include housing, utilities, groceries, and necessities like toiletries and cleaning supplies.

Wants: These are expenses that can be cut if necessary. They include cable TV, Netflix subscriptions, and entertainment.

Savings: This category includes anything you might need in the future like retirement or college funds. It can also include rainy day funds or an emergency fund for when things don’t go according to plan.

 Make a List of Categories

Start with a list of all the categories that are important to you. For example, some categories might be needs, wants, luxuries, retirement, education expenses, housing expenses, transportation expenses.


Start by looking at what you’re spending in each category.

If you need to be more intentional with your money, add up the totals of all your needs and divide that number by the amount of money that is allotted for needs.

Then, do the same thing for wants. The total of these two numbers will give you your percentage breakdown for each category.

After this step, you will have a better idea about how much you spend on needs and wants. Now, it’s time to calculate how much you spend on saving.


Step 1: List your needs.

Step 2: List your wants.

Your wants are items that you want that aren’t necessary to survive but bring happiness or fulfillment. Don’t be afraid to list some expensive items here, like a vacation or a new car.

Step 3: Calculate the percentage of each expense.

Does your needs category account for half of your budget? Is your savings at 20%?

See how you can customize this budget worksheet to fit what is most important to you!


If you want to put in extra effort for your savings, you may want to up that percentage. For example, if you’re maxing out on savings but are struggling with other categories in your budget, then maybe the percentage should be higher. 

This is especially true if you have retirement in mind or some other financial goal.

If you don’t think it’s worth putting more than 20% of your income into savings, you can lower this percentage. Still, even with a lower percentage, it’s important to try and save something each month.

A Simple Guide to Determining Your Own Budget Percentages for Each Category.

Step One: List your income sources

What are you bringing in each month?

Step Two: Determine how much of that income goes to debt payments

What percentage of your income is going to pay off debt each month?

Step Three: Add categories together to determine what percentage should go to each category.

How much of the remaining income do you want to spend on needs, wants, and savings? Now, break down this number between needs, wants, and savings accordingly.

Needs are necessities for day-to-day living. Things like food, utilities, housing expenses are needed. Needs may also be things like car maintenance or taking care of an aging family member. Wants are items that you desire but don’t need. These can include entertainment or vacationing if it’s something you enjoy doing once a year or every few years. Savings is money put away for emergencies or future investments in the business so it should be lower than wants and needs if possible.


The first step to making a budget is to establish what you have to work with. Dave Ramsey’s recommended budget percentages will help you prioritize your money and establish a monthly budget that feels comfortable for you. Once you have a monthly budget in place, the next step is to set goals. Goals are what will help motivate you to stick with your budget. The last step is to establish a way to track your spending habits so that you can analyze what’s going on and determine if your goals are being achieved. Once these steps are completed, you’ll be on your way to a healthier financial situation.