How You Should Be Spending Your Money, According to a Financial Planner

It would be nice if financial rules of thumb applied to everyone equally, but that's often not the case. People in different income brackets have different priorities, which is why telling everyone they should be spending a flat percentage of their income on necessities like food, housing, and transportation doesn't always make sense. In his book Rules to Riches, financial planner Mark Baird accounts for this variation by adjusting the common percentage guidelines based on income levels, as CNBC reports.

In some spending categories, the rules stay the same no matter how much you're making. Baird recommends that every household earning between $25,000 and $300,000 annually save or invest 5 to 20 percent of their income each year, for instance.

Other financial areas have more variation depending on how much money you're bringing in, though. If your income is $25,000 a year, Baird says you should be spending 18 to 23 percent of your earnings on housing. But if you make $50,000 or more, you should aim to spend 15 to 20 percent. In general, people earning lower salaries should set aside higher percentages of their income for food, clothing, transportation, and medical bills, while those earning more money should plan to spend more of it on taxes, insurance, and charitable donations.

As is the case with any spending-related guidelines, these recommendations shouldn't be taken as law. The money you put toward housing, taxes, and transportation will vary depending on where you live. If costs are especially high for one bill, see if you can cut spending in another part of your life. It's not the end of the world if you spend slightly less on charitable contributions than Baird recommends.

Check out the guidelines for households making $50,000 a year below. You can head over to CNBC for the full chart.

Taxes: 20 percent
Charitable Contributions: 10 percent
Savings and Investments: 5 to 20 percent
Housing: 15 to 20 percent
Transportation: 8 to 10 percent
Food and Beverage: 6 to 10 percent
Clothing: 3 to 5 percent
Furnishings: 2 to 4 percent
Personal Care and Cash: 3 to 5 percent
Medical and Dental: 3 to 5 percent
Insurance: 6 to 8 percent
Education and Self Improvement: 1 to 2 percent
Installment Payments: 3 to 4 percent
Entertainment, Dining, and Gifts: 1 to 3 percent
Vacations and Holidays: 2 to 4 percent
Miscellaneous: 1 to 2 percent