How To Divide Up Your Income

Hi folks

There are lots of models 'out there' on how to divide up our income. So, I thought I would share how we have done ours. It has worked in the past, is currently working extremely well and will continue to work well in the future I believe.  The fact that it does not have to be re-written every time something changes is the beauty of this method.

If our wages go down or up - we just stick to the percentages and adjust accordingly.  Our first few budgets were so severe that I nearly had break-downs over them.  This method still lets us live and enjoy life whilst still allocating every dollar to a purpose.

We do all these percentages concurrently. The last two 10% sections are stepped with two or three linear goals applied to each.....but I'm sure that is self explanatory.

Mr HM's Income % Break Up
Living Expenses
Absolutely all living expenses, bills, loan repayments, mortgage etc
e.g. Icecreams, socks, movies, coffee etc
Big Spend
e.g. Caravan, Europe trip, skiing trip etc
Emergency -> Self Insure -> Invest
$2000  emergency fund. 3 months expenses saved. Then invest after that
Debt -> Superannuation -> Invest
Bust Debt 1st. Then get Super up to $250K. Then invest after that.

Hopefully this may be helpful in part or full.

Take care and stay nice folks!

Mr HM (Phil


  1. We have two bank accounts, one for all the main can't not pay bills, the second is for extras mobiles, clothes food and what's left over savings. Some months we have spare cash, but not always, if we see a fantastic price on needed item then we use the second account. The main thing is we always have the correct balance in account one to pay the bills.

    1. That is a great simple model too Marlene. Needs and wants accounts - I really like that.

  2. Percentages are always easier to plan and follow than set amounts. I find it doesn't make it any easier to follow though if there is less just tighten your needs and wants!

    1. I'm a percentages bloke - absolutely. Exacting penny budgets do m head in

  3. Thanks this makes sense, I have always used amounts. May redo the budget in the new financial year.

    1. I used to use amounts for years too Deb - I just find this easier now. Have a muck around with it and see if it works for is just one of many great ways to approach money allocation


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