A rule of thumb is you want 30 percent of your take-home pay to be budgeted for your discretionary income.

What is the average discretionary income?

So I set out to at least get a ballpark idea for how much discretionary income the average American household gets. If you’re looking for the simplest answer possible, the answer is this: $20,748. In other words, the average household has about $1,729 left over after paying the bills each month.

How much of your budget should be discretionary spending?

Accounting for discretionary expenses is a part of the 50/30/20 budget, a plan for controlled spending. In this system, up to half of your budget is allocated to needs, 30% to wants (the discretionary expenses we’re talking about) and 20% to savings and debt repayment.

What portion of income should rent be?

30%
When determining how much you should spend on rent, consider your monthly income and expenses. You should spend 30% of your monthly income on rent at maximum, and should consider all the factors involved in your budget, including additional rental costs like renter’s insurance or your initial security deposit.

What percentage of your income should you save?

20%
More is fine; less may mean saving longer. At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

Can I live off 2000 a month?

Living on $2,000 a month is possible, and we were not the only ones to ever do it! Our budget isn’t nearly as tight now, but living with less taught us so much about how to live frugally and make the most of what we had.

What should the percentage of take home pay be?

While there are many factors that may affect the percentage of take-home pay that you allocate as discretionary income, the general rule is 30 percent or less. It might sound like a bit of a cop-out and, in a way, it is.

How much of your pay should be discretionary?

But before you get too hard-nosed, movie nights and shopping trips are not necessities and fall under discretionary income, too. While there are many factors that may affect the percentage of take-home pay that you allocate as discretionary income, the general rule is 30 percent or less. It might sound like a bit of a cop-out and, in a way, it is.

How much of your income do you need to buy a house?

You might be able to afford to spend 20-30 percent of your income on your mortgage, but perhaps (based on the size of your family) you only really need a scaled-down home that costs 10 percent of your income. There’s no reason to buy “more” home than you need, even if you can afford to do so.

What should your mortgage payment be as a percentage of your income?

One week’s paycheck is about 23 percent of your monthly (after-tax) income. If I had to set a rule, it would be this: Aim to keep your mortgage payment at or below 28 percent of your pretax monthly income. Aim to keep your total debt payments at or below 40 percent of your pretax monthly income.