I’ve referenced a great Wikipedia article to give you a rough guide as to how you should break your budget expenses down.
This is a generic set of ratio’s and may not be completely applicable to you, but an incomplete plan can sometimes be better than no plan at all.
If you’ve started your retirement savings late, you may need to contribute more than what is suggested in this article. A good financial adviser can help you understand what your monthly savings figure should be.
Remember that when you apply for finance to buy a house or car, that the lender will approve you up to the maximum that they feel you can afford. This may not be the same as what your budget says. Just because they’re happy to finance you for the maximum, it doesn’t mean that you must take it. Perhaps be a little cautious and take finance for a lower figure.
How many people do you know that get a house, and when interest rates change, can no longer afford the payment and need to sell the house or car and downsize. Selling in these circumstances puts the power in the buyers hands and they often don’t get the price they want.
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