3 Reasons I Don’t Deal With Percentages In My Budget

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One of the main questions I get asked and I think people ask in general about money and budgets is what percentage should xyz be?

Typically a lot of budget people and finance people deal in percentages and I get why. It’s easier to give a percentage than to give a number because the numbers will be different for each person.

But that’s just it, numbers will always be different for each person. So I don’t believe we can slap a percentage on our budgets and call it good. Let’s go through my reasons why I don’t deal with percentages and see if I can convince you too. ;)


3 Reasons I Don’t Deal With Percentages In My Budget

1. They are different for everyone.

Like I said, percentages, though the same, will end up with different numbers for everyone. We all make different amounts of money therefore percentages will always vary. How does it make sense that we should all be spending different amounts of money on the same bill or expense?

You’re right, it doesn't make sense. Which brings me to point number 2.


2. Percentages change.

My biggest problem with percentages is the way they work. You make more money, with percentages you spend more money.

Let’s say I tell you to have a housing payment that is 30% of your income a month. So you buy a house that fits that parameters. Then let's say you get a raise and that income goes up. What does dealing with percentages tell you? That you can afford a bigger house now!

Despite what people think they’ll do when they get raises or extra money (I’ll pay off debt or finally have a savings again!), they usually do what everyone else does and just up their spending.

I don’t deal with percentages because they change. As you make more money you spend more money unnecessarily instead of sticking to your budget that has been working perfectly fine before you got that extra money.


3. Real numbers matter more.

To me using percentages isn’t dealing with real numbers. It’s kind of like when people say “It was on sale” or “It was 50% off”.

Guess what those aren’t? Real numbers.

I don’t deal with titles of numbers or prefaces. Tell me what the number is and not how much percentage off of the original it is. The number doesn’t change just because you call it something else like “a sale item”.

A $1200 house payment is the same $1200 whether it’s 25% of your income 50% of your income or 5%. Real numbers matter and are what will transform your budgets. If you deal with real numbers instead of percentages I can promise you your bank account will notice.


Take a look around the blog and you’ll see what I mean by dealing with real numbers. I make a point to share with you my budget numbers, not percentages, and if you ask me for a percentage I’ll usually give you a shortened version of this speil. Try for yourself looking at your budget and expenses as numbers instead of percentages and let me know how it goes!