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The Perfect Pie

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tagged: money
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Find out where your money is really going, then adjust your recipe accordingly.

by JJ Montanaro, USAA


Where your money should go is often very different from where it does go.

I spoke recently with a military spouse named Debi, who’s involved with the Accredited Financial Counselor program. She told me about a class she was presenting on her installation. At the core of her presentation was the idea of creating a “spending pie” to help figure out whether your spending habits help or hurt your pursuit of personal financial freedom.

Using an annual household income of $60,000, here’s one example of where a family’s money should go on a monthly basis:


20% Housing ($1,000/month):

This includes mortgage (principal, interest, taxes and insurance) and/or rent to put a roof over your head. This may be lower than what a lender will lend, but too many folks are house rich and cash poor. Check that, they were house rich.


16% Taxes ($800/month):

It’s easy to forget about them, but they’re everywhere. Income tax, sales tax, personal property tax and even capital gains tax (though given the housing and stock markets, it might be tough to remember what those are!).


12% Food ($600/month):

The basic cost of keeping everybody in your household fed.


11% Other Stuff ($550/month):

Can include clothes, kids’ sports, vacations, charitable contributions and any other expenditures not covered by our other categories.



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