Comments on: Budgeting By Percentages Does Not Work

By: the PearBudget blog » Percentage Budgeting

the PearBudget blog » Percentage Budgeting — Wed, 14 Nov 2007 12:34:10 +0000

[...] in looking, I found a provoking post at No Credit Needed: Budgeting By Percentages Does Not Work. In it, he notes: To build a quality, accurate, usable budget, you need to work with the real [...]

By: NCN

NCN — Tue, 23 Jan 2007 17:21:38 +0000

Edenz… the main problem that I see is that people get frustrated when their percentages don’t align “perfectly” with the suggested percentages, and give up, and go on without using a budget. Having a personal ‘percentage’ goal is one thing, but feeling like you have to conform to some author’s idea of a proper percentage is another… thanks for the comment!

By: edenz

edenz — Tue, 23 Jan 2007 17:11:57 +0000

I think the percentages are also useful to see if you are making ‘smart’ financial decisions. For example, if you look at your budget and you are spend 35% on your car payment and the suggested percentage is 15% you might want to look at that category and really examine if that is where you want to be spending your money.

By: Kirby on Finance

Kirby on Finance — Tue, 23 Jan 2007 12:27:59 +0000

I think you’ve got a great point – you shouldn’t budget by percentages, but I think they can be very helpful in analyzing your spending habits after the fact. If you find a quarter of your finances are going to entertainment, you might find it a more frugal option to cut it back to 10 percent. But you’re right – hard and fast percentages make budgeting unrealistic!