How Much Should You Be Saving/Spending?

Do you know how much you should be spending on various bills or areas in your budget? Do you know what the “experts” recommend? If you are wondering what you should be doing when you budget or how much money should be designated to certain areas of your budget, it is important to consult popular advice, but it doesn’t mean it should be the end all answer. Finding a happy balance should be something that you take the time to discern. There are many people out there that want to tell you where to spend your money or how much to give. I want to suggest that this is just impractical.

What the “Experts” Tell You to Spend / Give

Many people use national averages to regulate their spending. One of the most common guidelines is that you should not spend more than more than 40% of your income on housing. This means that when you add up your household income, no more than $.40 for every dollar that you earn should be spent on housing-related costs. This sounds like a great guideline (as it prevents people from overspending), but it is limited in its scope. I’ll get to that in a minute.

Another popular rule of thumb, particularly within Christian circles, is that you should tithe 10%. Many Christian circles believe that you are required to give 10% of your income to the church because it is biblical. While Christian tithing is an important value because of its indication of generosity, this hard and fast rule is rather limited and fails to highlight the real importance for tithing.

Why These Rule of Thumbs are Limited

When it comes to understand these common suggestions for how we should spend our money, it becomes clear to me that we have to accept them with a grain of salt. They may be beneficial for comparison, but they should not be followed strictly. Here’s where the suggestions fall apart.

The recommendation not to spend more than 40% is rather limited because it does not account for the different regions of the country. My wife and I live in the greater NYC area and housing (along with cost of living) is higher than almost anywhere else in the country. Yet, while housing is higher, our transportation costs are significantly lower than my siblings as they are required to have to cars. My wife and I are able to get by with one car that we drive infrequently because of our access to public transportation. To make a long story short, it doesn’t account for the many variables that affect your budget. Spending more than 40% of your budget may be perfectly okay if other costs are lower.

Thinking about strict and fast rules about giving or spending always reminds me about the Widow’s offering in the gospel of Mark. Here’s what Mark 12:41-44 says…

⁴¹  And he sat down opposite the treasury and watched the people putting money into the offering box. Many rich people put in large sums. ⁴² And a poor widow came and put in two small copper coins, which make a penny.^[a]43 And he called his disciples to him and said to them, “Truly, I say to you, this poor widow has put in more than all those who are contributing to the offering box. ⁴⁴ For they all contributed out of their abundance, but she out of her poverty has put in everything she had, all she had to live on.”

The truth is that many of these guidelines break down because of the different incomes that people earning. Giving 10% is a lot easier for someone earning 100k each year than a poor graduate student who is barely paying for the cost of tuition. The truth is that many recommendations prove their inadequacy when you try to appropriate them to people with lower incomes.

If you are trying to figure out how to budget, it’s important to listen to recommendations as long as you are making your own decision after that. If you fall into cookie-cutter plans that don’t apply to you, you could become frustrated and give up being responsible with your finances. My advice would be to take time to discern what will work for you and what is the best use of your money, paying close attention to your motives when doing so.