I recently got asked a by a reader what a good percentage of his paycheck should he be giving away and saving. Great question, something I’ve tried to spend a lot of time figuring out. Everybody’s situation will be a bit different so don’t consider the following set in stone.

A quick Google search for “recommended percentages of budgets” will give you a nice range of percentages for how to spend your money. Given that this is a blog for Young Professionals, I figured that I would tailor my recommendations to someone similar to myself:

Housing (including utilities): 20-30% This will vary greatly depending on where you live. Some of my friends here in Atlanta pay upwards $900-$1000 per month, but friends in Chattanooga pay $600-$700. Certainly don’t live in a place where you don’t feel safe, but at this stage in our lives, the penthouse isn’t necessary.

Debt: 15-25% This does seem a bit higher compared to other standards, but its reality, as most of us are straddled with student debt. A recent CNN article stated that the average student graduates with $27k in student loans. To pay that off in 10 years, you’d have to pay apprx $300 each month. Wow, that’s no joke. We’re still young and I think that while we don’t have other obligations (family/marriage etc…) we should get to work on our debt. A little extra each month really goes a long way.

Savings: 10-20% Although not your top priority, savings is an important feature of your budget. Its crazy, but it wouldn’t hurt to start thinking about retirement or a home. That car that got you through college won’t last forever. Absolutely put enough into your 401(k) to get any employer match.

Non-discretionary: 15-20% Sort of a schmorgisborg here but these are items like: your monthly cell phone bill, car insurance, groceries, gas, parking, clothing, medicine. These are items that you don’t have too much of a say over and come up each month.

Fun(!): 15-20% The part we’ve all been waiting for, the whole reason we get up each morning and punch in to work. Travel, eating out, movies, bars, etc…this is the section of the budget we enjoy the most. Although its difficult, this is the section that you have to work the hardest to keep at a reasonable level. I know its Friday at 5pm and you’ve worked all week and just wanna go out and spend some “beer money”. Its when your fun money gets out of control that other, arguably more important sections take the hit.

Now, that’s not to say that I’m recommending being a social hermit and never going out. You just have to start making choices. Start finding creative ways to decrease your “non-discretionary” spending (I realize that’s a slight contradiction), and tack on a bit more to your fun. If you really enjoy going out for drinks, just cut back on going out to eat three times a week or seeing a movie twice a month.

Giving: 5% Whether its to a church or a homeless shelter or to helping keep music in the classroom, I believe it is important to give back. You’ll feel a great sense of accomplishment and pride. (And did someone say tax deduction?!?)