When you go to a bank for a loan or you want to get a mortgage on a new house, lenders will no doubt be watching your every financial move to determine what kind of financial risk you will be if they choose to lend you the money. Such budgeting guidelines and risk assessments are done all of the time and it is would be a financially wise idea for your to understand the same principles your creditors take into consideration before approving you for credit.

The following is a breakdown of percentages that your creditors and potential lenders want to make sure you are not exceeding when it comes to how you are spending your income. Take a look at the numbers and then check them against your own budget.

Housing Expenses: Guideline 35%
These expenses include your mortgage or rent payments, insurance notes, all related taxes, home improvement and repair costs, and utilities.

Transportation Expenses: Guideline 20%
These expenses entail what you spend each month on auto insurance, gasoline, maintenance such as oil changes and tires, repair costs, public transportation expenses, and parking fees.

Miscellaneous Expenses: Guideline 20%
This category of expenses essentially include day to day living expenses, including groceries, medical care, prescription costs, personal needs, clothing, and the like.

Debt Expenses: Guideline 15%
These expenses include the amount of money you pay for your monthly credit card bulls, student loan payments, personal loan notes, and any other debt payment you are obligated to make on a regular basis.

Savings and Investment Expenses: Guideline 10%
This category of expense includes all of your savings deposits, stocks, retirement funds, rental real estate, bonds, and the like.

When you compare these calculations against your household budget, see where your numbers are at. If you find that you are spending way too much money in one or more categories of expenses, it is time to start making some financial cuts to your daily living and improve on your budgeting skills. These percentages are a great resource to keep on hand because over time, your budget will continually need to be updated in order to remain financially savvy.

Budgeting your income is key to getting out of debt and remaining debt free for years to come. It is also an excellent way to make sure your income is divided equally, allowing you to start saving your cash to avoid debt in the future.