50% 35% 15% ?

BMTH

This might be common knowledge but I just read an article that of your take home pay a good guide is to aim for 50% of your monthly income net pay on mandatory household bills, 35% on yourself to do as you please and 15% invested. This is just a example...

£875 bills, £612 personal, £262 shares/saves. Just doesn’t look right to me?

Also, I’ve just opened a vanguard account and deposited a lump sum in there between 2 funds. Am I ok leaving that in there without topping it up? Seen a few people suggest setting a DD up per month and always depositing into it. I’m not really in a position to do that at the mo!

eskbanker

BMTH said:

This might be common knowledge but I just read an article that of your take home pay a good guide is to aim for 50% of your monthly income net pay on mandatory household bills, 35% on yourself to do as you please and 15% invested. This is just a example...

£875 bills, £612 personal, £262 shares/saves. Just doesn’t look right to me?

There's no such thing as a 'right' one-size-fits-all answer, which is why there are so many variants of these rules of thumb - if you look around you'll find plenty more, so it's not a matter of 'common knowledge', it's just somebody's opinion.  Do what's right for you and your circumstances, which will be different from everyone else's....

BMTH said:

Also, I’ve just opened a vanguard account and deposited a lump sum in there between 2 funds. Am I ok leaving that in there without topping it up? Seen a few people suggest setting a DD up per month and always depositing into it. I’m not really in a position to do that at the mo!

There's no obligation to make further contributions.

[Deleted User]

I don't think such a thing exists, you pay your bills and burn or save the rest, in different sums. I certainly would not like to be paying more than 45% on bills/mortgage.

Alexland

BMTH said:

This might be common knowledge but I just read an article that of your take home pay a good guide is to aim for 50% of your monthly income net pay on mandatory household bills, 35% on yourself to do as you please and 15% invested. This is just a example...

Investing only 15% really wouldn't work for our early retirement ambitions!

Albermarle

Don't forget if you are employed you will already be saving/investing some via your pension.

DireEmblem

There are variations of this, which people say on average is a good 'financial balance'.  I've known it as 50%/30%/20%, and I think the logic is around working a normal timeframe, and being able to continue to spend in similar manner.

In reality, it all depends on your salary, and down to how you want to live your life.  The 50% part is all about not over extending yourself on the bare necesseties.

Eco_Miser

Articles of that nature that I've seen say not more than 50% on essentials, and preferably considerably less.  In part it's a warning to those on low pay not to overstretch themselves on accommodation.

I've also seen 50% investments suggested.

The necessary percentages will vary with your salary. The more you earn, the lower the percentage you should be spending on necessities, and the more you should be investing for your future.

Steve182

I think those numbers would be nowhere near the norm. Might be near the ball park for a middle aged company director with house virtually paid off, but nowhere near the mark for most.

I suspect the norm, especially for those in their younger years may be closer to 75/25/0

IvanOpinion

It is all about balance, there is no sense in leaving yourself short so that you are struggling to pay todays bills or not able to enjoy yourself with a holiday or other activity.  On the other hand frivolous expenditure could leave you short in later life.  There is no one size fits all.

aroominyork

Alexland said:

BMTH said:

This might be common knowledge but I just read an article that of your take home pay a good guide is to aim for 50% of your monthly income net pay on mandatory household bills, 35% on yourself to do as you please and 15% invested. This is just a example...

Investing only 15% really wouldn't work for our early retirement ambitions!

Just as well I didn't save anything near 15%. I've no idea what I'll do with my days when I retire, except work on my poker game, walk the dog and stare at my investments.

DireEmblem

aroominyork said:

Just as well I didn't save anything near 15%. I've no idea what I'll do with my days when I retire, except work on my poker game, walk the dog and stare at my investments.

How about dedicating your time to a worthy cause?