Dave Ramsey Recommended Budget Percentages [Calculator]

Understanding the Dave Ramsey recommended budget percentages will help you budget effectively, so you can reach money goals faster.

I am a huge Dave Ramsey fan. I started learning about the financial expert with the famous radio show in January or February of 2020. My husband and I took Financial Peace University on our own during Covid, and to be honest, most of it went right over our heads. After a couple years of trying to follow his plan our way, we realized we were making no financial progress. At some point, I started listening to his radio show more often, and it finally clicked. His baby steps actually work, if you follow them exactly.

Now, I listen to his show almost daily, and I can’t get enough of it. One of my favorite aspects of his financial plan is that it is extremely simple, straightforward, and consistent. You can always rely on his advice to stay the same, and he won’t bend it to fit the trends.

He even gives budget percentage recommendations, so you really can be sure to set up your budget for financial success. While he does recognize that every personal finance situation is different and your budget percentages may vary, I will discuss Dave Ramsey’s budget percentage recommendations and how to adopt his suggested budget plan in your life.

The Budget Categories Dave Ramsey Uses

On the Ramsey Solutions website, they have 13 budget categories listed. Using these 13 main categories, break the budget categories down into subcategories that reflect your monthly expenses. Each subcategory is a budget line. Then, when you create your budget, you will allocate your take-home pay to the budget line items until all the income is assigned to an expense. In this article, we will just look at the 13 main categories that Ramsey teaches about:

• Giving
• Saving
• Food
• Utilities
• Housing
• Transportation
• Health
• Insurance
• Childcare
• Lifestyle or Entertainment
• Personal Spending
• Miscellaneous
• Debt

The Dave Ramsey Budget Percentage Recommendations

Here are the budget percentages I came up with based on the percentage guidelines listed on the Ramsey Solutions website:

Giving (10%) — Dave recommends giving, even if you’re in debt.

Saving (0-15%) — This percentage depends on what baby step you’re on (more explained later). I would include emergency fund, investments or retirement contributions, and other large savings goals, such as a big vacation or new car, in this category.

Food (10-12%) — Food needed to feed your family. This percentage depends on how many people are in your household and other factors.

Utilities (5%) — Electricity bill, gas, water, garbage, and any other utilities. I also include Internet and phone bill in this budget line.

Housing (25%) — Ramsey suggests your housing should be no more than 25% of your take-home pay. This includes rent or mortgage payment and any insurance, HOA fees, property taxes, etc.

Transportation (10%) — Gasoline, public transportation, oil changes, or anything you spend to get you from place to place.

Health (5-10%) — Not health insurance, but any medical costs after insurance. This amount can vary month to month.

Insurance (10-25%) — Any health insurance, auto insurance, life insurance, or other additional insurance policies you and your family have.

Childcare (0-25%) — Any childcare needed for parents to work.

Lifestyle or Entertainment (5-10%) — Gym membership, movie tickets, salon visits, etc. If you are in debt or living paycheck to paycheck, you’re supposed to cut this category out.

Personal Spending (5-10%) — Fun money for each spouse. You’re also supposed to cut this category out or bring it as low as possible if you’re in debt. I recommend having a little fun money, no matter how small your budget is, though 🙂

Miscellaneous (5-10%) — You can set aside an amount in case your bills are a little higher one month, or to set aside in specific sinking funds, such as birthday gifts or new clothes. No one can budget every dollar perfectly, so it’s wise to have a miscellaneous category for when things come up.

Debt (0-15%) — Dave Ramsey doesn’t suggest a certain percentage, but that if you’re in debt, put as much money towards it as possible until it’s gone using the debt snowball method. Debt payoff should be a priority. This budget category could include car payments, student loans, credit cards, etc.

As you can see, the percentages don’t add up to exactly 100%. That’s because every budget is different, and these are just guidelines.

How to Calculate Your Current Household Budget Percentages

In order to compare your budget percentages to Dave’s budget percentage recommendations, you need to calculate your current household budget percentages!

1. Track your spending habits by recording your expenses for a pay period. Be sure to assign each expense to a budget category.
2. Divide each budget category by the income you earned in that pay period.
3. Multiple by 100.

Dave Ramsey’s Suggested Budget vs. My Household Budget Example

Let’s compare Dave Ramsey’s suggested budget percentages with my own household budget percentages. A little background on our financial situation: we are currently on baby step 2, we live on one income, and I am a stay-at-home mom.

Giving – 0-10% (Suggested: 10%)

With our current financial situation, we don’t usually give a full 10% at this time. We aim to give as much as we can fit in the budget.

Saving – 0% (Suggested: 0-10%)

Unless we are building our emergency fund back up after using it for something, we don’t regularly save in our budget. Our current goal is paying off debt.

Food – 21% (Suggested: 10-12%)

I combine our food, toiletries, baby products, and everything we get at the grocery store in this one lump category in our budget, so that’s why it’s a little high. And actually, since we live on a pretty tight income, our entire grocery bill is still lower than the USDA “thrifty” monthly food plan ($987.20 for a family of five like ours).

Utilities – 12% (Suggested: 5%)

For our budget, this includes gas, electricity, water and garbage, cell phone service, and internet service. I wasn’t sure where to put cell phone and internet, but I figured they are pretty standard services in our current world! If I put those bills in a different category, our utilities would probably be closer to 5%.

Housing – 14% (Suggested: 25%)

Our mortgage payment is extremely low, so our housing costs are fortunately even more affordable than Dave Ramsey suggests. I know this is a budget category that most people struggle to keep affordable in their budgets. If this budget category is extremely high for you, you can try to lower other areas of your budget to make up for it!

Transportation – 11% (Suggested: 10%)

We live in a small rural town, so we use a lot of gas. A trip to the grocery store is at least a 25-minute drive, and my husband’s work commute is 35 minutes.

Health – 1% (Suggested: 5-10%)

My husband currently gets amazing health coverage through his work for our family. We budget a very low amount to cover medical costs.

Insurance – 6% (Suggested: 10-25%)

This includes our car insurance and term life insurance. My husband doesn’t have to pay anything for his health insurance, and our home insurance is built into our mortgage. We do have a jewelry policy as well, but it’s only $30 for the year.

Childcare – 0% (Suggested: 0-25%)

I am a stay-at-home mom, so we don’t pay for any childcare.

Lifestyle or Entertainment – 2-3% (Suggested: 5-10%)

This category varies depending on how much extra money we have each month. We usually use this money to eat out or do something fun with the kids.

Personal Spending – 5% (Suggested: 5-10%)

My husband and I each get some personal spending money every month. We just recently raised this amount because we were feeling pretty constrained by our tight budget. Usually, this category is more like 1-2% since we are on our debt-free journey.

Miscellaneous – 4% (Suggested: 5-10%)

This category includes our subscription to Google Storage as well as sinking funds for Christmas gifts, other gifts, and car maintenance.

Debt – 21-24% (Suggested: 0-15%)

Whatever we have left, we throw at debt!

How to Fit Debt Payments into Your Budget

If you have debt (besides the mortgage), Dave Ramsey considers you to be on baby step #2 (after building up a $1000 starter emergency fund). That means you will work towards paying off your debt as quickly as possible using the debt snowball. If you save at the same time you are paying off debt, you will slow your debt-free journey down. Lower all the budget categories that you can, including saving, to raise the debt percentage as high as possible.

Dave Ramsey Savings Percentage

If you are past baby step #2 and have paid off your debt, how much should you save? The next step would be to save up a 3-6 month fully funded emergency fund as soon as possible. Just like when you were putting everything extra towards debt in the last step, you will try to put as much extra money in this category until you get your fully-funded emergency fund. The savings percentage at this point is as high as you can make it.

After you build up that 3-6 month emergency fund, you will enter baby step #4, which is to invest for retirement. Dave Ramsey’s savings percentage for this baby step is 15% (to go towards retirement). You don’t have to constantly save each month to grow your emergency fund once it’s built up. You only need to replenish it after you use any of it.

How to Determine What Budget Percentages to Use for Your Own Budget

Now that I’ve shared Dave Ramsey’s recommended budget percentages, you get to decide how to adopt it in your own budget. If you don’t have a budget yet, the first step is to make one. Then, try to stick close to the budget percent recommendations that Dave lays out. You may find that some of your budget categories are vastly different from what Dave suggests. Sometimes, this is unavoidable, but sometimes, this is a red flag that your budget doesn’t align with your financial goals. Reflect on your financial priorities and the Dave Ramsey budget percentage recommendations. Then, work on aligning your budget with those priorities.

Use my free budget calculator on Google Sheets to determine how much you should spend in each budget category based on your income and Dave’s budget guidelines!

Budget Percentage Alternative – 50/30/20 Budget Plan

If Dave Ramsey’s suggested budget feels too complicated, there are different ways to achieve similar results. A simple alternative to his budget percentages is the 50/30/20 budget plan. Instead of breaking down the budget categories into 10-15 different categories, you use three major categories:

50% Goes Towards Needs

Needs include giving, food, utilities, housing, transportation, health, insurance, and childcare.

30% Goes Towards Wants

Wants include lifestyle or entertainment, personal spending, and miscellaneous.

20% Goes Towards Saving

Saving include any savings, investment, or debt payoff goals.

How Do I Make a Budget That Works?

Dave Ramey advocates zero-based budgeting, and that is the type of budgeting that I use and love, too. A zero-based budget is a method in which you take every dollar of your monthly income and assign it to an expense category.

If you want a Google Sheets zero-based budget template based on Dave Ramsey categories and principles, you can grab my template here!

Conclusion – Dave Ramsey Budget Percentage Recommendations

In conclusion, the Dave Ramsey budget percentages are guidelines to help you make extra sure that you are putting your money towards the right things in your budget. If your monthly expenses do not align with your financial priorities, you will not reach your financial goals very fast.

For example, my guilty pleasure is going through the drive thru. I love how easy it is to run through the drive thru when meal time feels chaotic with kids, and it gives me some time to breathe. However, if I saw that I spent 10% of our income on Happy Meals and lattes, I might get the wake up call I needed to cut back on the fast food and put more money towards paying off debt.

Looking at the percentages of your own budget compared to Dave Ramsey’s suggested budget shows you budget lines that you may need to adjust. With this awareness, you can take steps to put more money towards your financial priorities and reach your financial goals!

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