Comments on: What is the recommended Expenditure to Earning Ratio? http://www.thelinuxlabs.org/asset-based-loan/what-is-the-recommended-expenditure-to-earning-ratio Loans Thu, 02 Sep 2010 23:06:06 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: otto3883 http://www.thelinuxlabs.org/asset-based-loan/what-is-the-recommended-expenditure-to-earning-ratio/comment-page-1#comment-110 otto3883 Sat, 30 Jan 2010 19:39:59 +0000 http://www.thelinuxlabs.org/asset-based-loan/what-is-the-recommended-expenditure-to-earning-ratio#comment-110 It depends on the person and the time period you're looking it. It might sound great to spend 80% of your income and save the rest however if you have a huge expense every 3 years that may not be enough. Ideally over the course of your life you should spend a percentage that is less than 100% and you'll be alright. If you're looking for more of a rule of thumb a commonly held theory is that you should spend 50% of your income on needs, 30% on wants, and save the other 20%, your mileage may vary though. It also depends on what stage of life you're in, obviously if you're a working adult you should be saving some of your money so that you can spend it in retirement. On the flip side of that, most 80 year olds don't have much if any income and are living off of their savings accounts so financially they may be ok spending 200-500% of their annual income. Unfortunately that's as specific of an answer that I can give to such a general question. If you want the easy answer, follow the 50-30-20 rule, don't let your mortgage expense exceed 30% of your income and don't let your other debt payments exceed more than 10%. I hope I helped, but I wish I could offer something more concrete.<br><b>References : </b><br> It depends on the person and the time period you’re looking it. It might sound fantastic to spend 80% of your income and save the rest but if you have a huge expense every 3 being that may not be enough.

Ideally over the course of your life you should spend a percentage that is less than 100% and you’ll be alright. If you’re looking for more of a rule of thumb a commonly held theory is that you should spend 50% of your income on needs, 30% on wants, and save the additional 20%, your mileage may vary though.

It also depends on what stage of life you’re in, obviously if you’re a working adult you should be saving some of your money so that you can spend it in retirement. On the flip side of that, most 80 year olds don’t have much if any income and are income off of their savings accounts so financially they may be ok spending 200-500% of their annual income.

Unfortunately that’s as specific of an answer that I can give to such a general question.

If you want the simple answer, follow the 50-30-20 rule, don’t let your mortgage expense exceed 30% of your income and don’t let your additional debt payments exceed more than 10%.

I hope I helped, but I wish I could offer a upset more concrete.
References :

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