How To Use Dave Ramsey Budget Percentages In 2021 [Helpful & Easy]

Do you want to know the guidelines of the Dave Ramsey budget percentages? He has a very clear opinion on household budget percentages, which we will get into today. 

Dave Ramsey loves himself a clear set of rules and guidelines for everyone to follow. That way he has inspired millions to get their finances on track and get out of debt. 

So, what are the recommended Dave Ramsey budget percentages?

Recommended Dave Ramsey Budget Percentages

A great way to start tracking your finances is to start a budget

It can be overwhelming when you start budgeting, where do you start?  

To manage your money, these are the different categories and budget percentages Dame Ramsey recommends:

  • Giving – 10 percent
  • Saving – 10 percent
  • Food – 10 to 15 percent
  • Utilities – 5 to 10 percent
  • Housing costs – 25 percent
  • Transportation – 10 percent
  • Health – 5 to 10 percent
  • Insurance – 10 to 25 percent
  • Recreation – 5 to 10 percent
  • Personal spending – 5 to 10 percent
  • Miscellaneous – 5 to 10 percent

Here is a simple overview of the budget percentages that can be used as a guideline:

Dave Ramsey Recommended Budget Percentages

Brief Budget Percentage Category Explanation

Once we know what the budget categories and percentages are, let’s go into what they mean. 

Giving (10%) – Dave Ramsey sees giving as one of the cornerstones to his budgeting approach. Give to charities you care about is something I 100% agree with – be kind to others

You may be surprised how giving will change your money mindset!

Saving (10%) – Save 10% of your income towards your future. This can be used towards building up your emergency fund or funding your (early) retirement.

Food (10-15%) – This Dave Ramsey budget recommendation comes down to both your grocery budget and eating out. This is a hard one to keep because it’s easy to spend a whole lot of money going out to eat. Plan ahead to avoid going for convenience at the very last minute. 

Do you need some help with that? Start here:

Utilities (5-10%) – Utilities are bills for things including gas, water, and electricity. If you’re having a hard time, here’s how to cut your electricity bill in half

Housing budget percentage (25%) – Total housing is your rent or your mortgage, plus any property taxes or insurance you may have. While this is a big chunk of your budget, it can be challenging to not go over 25%.

Housing is also one of the BIGGEST expenses you can cut back on. If you can cut back your housing expenses from $1500 to $1000 for example, that’s an extra $6000 you’re saving. This can go to other categories or towards your investments. 

Transportation (10%) – Transportation includes everything that you need to get from A to B. This can be a car, your bike, or public transport. This includes car insurance, gas, parking, and more. 

Health (5-10%) – This is for health related costs. While it’s not something you can plan for, it is something that you can budget for. This includes trips to the doctor, any out of pocket medicines you may need, or urgent care. 

Let’s hope you don’t need all of that. You know what they say: hope for the best and plan for the worst. 

Insurance (10-25%) – Your insurances include health insurance, life insurance, disability insurance, and more. This does not include car insurance (goes into your transportation category) or home insurance (goes into your housing category). 

Recreation (5-10%) – Recreation is your fun category, also called entertainment. This includes your gym membership (YES working out is fun), your Netflix plan, and day trips with your family. 

Personal spending (5-10%) – Your personal spending is anything from going to get a haircut, to buying clothes, to decorating a new room in the house, and more. 

Miscellaneous (5-10%) – Having a miscellaneous category can save you in more ways than one. There are always expenses that pop up that you either forgot to budget for or that are totally surprising you. This is your buffer to make sure you have that safety cushion. 

It’s like an emergency fund but for your budget. 

Dave Ramsey Budget Percentages
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Why Use Budget Percentages?

Budget percentages are a great way to dip your toes into budgeting. When you don’t know where to start, using budget percentages may be for you. It’s great to have a guideline that you can work towards and tweak later on based on your personal preferences.

Using budget percentages gives you insights you may now have had before. You know that you spend $1500 on rent, but you only realize that is too much when you see it’s 50% of your salary. 

Going over your budget in percentages and putting them in separate categories gives you the exact insight about what you’re spending where. You can make changes to that if necessary. 

How To Determine The Right Budget Percentages?

The situation is different for everyone, so how can you know what are the right budget percentages for you?

Use the budget percentages by Dave Ramsey as a starting point. Check the percentage amounts and see if they fit your personal situation. 

Check out current spending and budget and compare that with the budget percentages by Dave Ramsey. 

You may want to increase or decrease some of the budget percentages that they have set. You may also be able to identify what your best and worst categories are – so you know where you can pay some extra attention. 

What If I Have Debt?

Wait, there isn’t any debt payoff in the Dave Ramsey’s budget percentages, why is that? He always advises that you take on a side hustle or make some extra money. With that extra money, you can pay off your debt such as student loans, credit cards, and title loans

How Much Of My Income Should I Save?

Dave Ramsey recommends a budget percentage of 10% toward savings. If your current situation is living paycheck to paycheck, this may be a good place to start. If your current situation is better or you have big financial goals like financial freedom, you may want to try to increase your savings rate gradually toward 20-25%. 

How Do I Make A Budget That Works?

Start off with the Dave Ramsey budget percentages and stick to budgets that are realistic for your specific situation. See what you are spending now, that will be your starting point to make a plan for every dollar. Make sure you put money towards your goals and keep paying all of your bills.

When your personal situation is very different from the budget percentages, don’t try to radically change them to fit them in. You want the change to be slow and sustainable in order to stick with it. 

What Other Budgeting Options Are There?

There are thousands of different ways to create a budget and everyone will have their own preferred method. 

The budget percentages Dave Ramsey lays out is quite simple to start with. You can take it from there and make your very own budget. 

There are some other useful budgeting methods that may be a better fit for your specific situation:

  • 50-30-20 budget
  • Reverse budgeting
  • Cash envelope system

50-30-20 Budget

When you find the Dave Ramsey budget percentages overwhelming, the 50-30-20 budget may be for you. It’s a simplified way of budgeting that gives you a quick start. 

In this budget, 50% of your money goes to needs, 30% to wants, and 20% to savings. The categories are as follows:

  • Needs 50% – this includes housing, utilities, groceries, transportation, and insurance
  • Wants 30% – this includes eating out, recreation, personal, and miscellaneous
  • Savings 20% – this includes savings and debt repayment

Click here for a complete guide on the 50-30-20 budget

Reverse Budgeting

As the name implies, reverse budgeting means that you turn the normal budgeting method around. You are going to pay yourself first

Normally with budgeting, you take your income and you allocate it between the budgeting categories. With reverse budgeting, you decide on your savings and debt payoff goals and put that money aside first thing when you get your salary. 

If you’re trying to pay off $300 in debt and save $200 per month towards your emergency fund, that means you’re taking $500 from your paycheck before allocating it among the budgeting categories. 

Cash Envelope System

A budgeting method that is also recommended by Dave Ramsey, is using the cash envelope system. With this budgeting method, you can only spend money in cash. 

At the beginning of the month you take out money from the ATM and you allocate it among the envelopes. This is how much money you have for every category. 

Best Budgeting Apps

There are dozens of budgeting apps available that help you stay on track. Here are the best budgeting apps to consider!

Printable Budget

There are many budget templates out there, that you can just print and fill out with your monthly budgeting percentages. 

Check it out here!


Personal Capital

With Personal Capital you can see an overview of your finances in one dashboard. You can track your net worth, cash flows, portfolio balance, and more. And it’s totally FREE to use!

You Need A Budget (YNAB)

YNAB is one of the most popular budgeting apps. It comes at a small monthly fee. This app is purely for budgeting and doesn’t do any other financial analysis. 

Bonus: Trim Financial

Many of you may know Trim as the service that lets you save money on your subscriptions. Actually, they also have a budget function. You can set up your budget through them and they will update you through text messages on the progress. 

FREE - Start Saving Money

Take The First Step To Your Goals

Tracking your finances truly is the #1 step towards your goals. Start by tracking and take it step by step. 

It’s extremely important to know where your money is going and what you’re spending it on. 

Tracking your spending means that you pause and think about where you’re spending your money. This will make you save hundreds of dollars per month!

If you want to automate this, I’d recommend any of the aforementioned tools, in particular, Personal Capital.

Conclusion – Budget Percentages Dave Ramsey 

While budgeting often gets a bad rap, a budget works like a charm when you want to turn around your financial situation. 

Budgeting will tell you where your money goes and give you the freedom to spend where it matters most. 

There is not one perfect budget that will work for all households. Everyone has their personal situation and has to account for their specific expenses. 

The budget percentages of Dave Ramsey can be a good place to start. Evaluate your expenses, create a budget, and try to slowly work towards your ideal situation. 

What do you think about the budget percentages by Dave Ramsey?

How To Use Dave Ramsey Budget Percentages

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