How Much Money Should Be Left After Paying Your Bills?


Personal finance management is critical if you want to lead a comfortable life. Several budgeting ideas have been put forth, including the 50/30/20 rule, which classifies your bills according to needs, wants, and savings, respectively.

But how much should remain once you pay all your bills?

After paying your bills, you should have at least 50% of your money left. The first half of your money should cover bills that fall under “needs”, while the remaining 50% can be split between wants (30%) and investments, savings or debt repayment (20%).

The rest of this article will discuss other topics related to budgeting and how to ensure you have money left after paying your bills.

What Is a Good Amount To Have Left Over After Bills? 

It is impossible to discuss money management without looking at your income vs expenses. And I’m assuming you don’t want me to see that!

But one thing I do know is that if all your money is spent on paying your bills, then you are simply living above your means. And while you may be in a better position than someone who goes into debt to pay bills – if disaster strikes, you’re likely going to find yourself in a whirlpool of debt that is extremely hard to get out of.

A good amount to have left over after bill payment is at least 20% of your after-tax income – if you can save more, even better. But first, pay bills that you can reduce, like your mortgage or car insurance. Then, aim to reduce other monthly bills, like food, groceries, and subscriptions.

If you can manage to have 20% of your after tax income saved after all of them that’s really great. My recommendation from there would be to completely pay off all your debts, set aside an emergency fund of 3-6 months worth of expenses and then starting investing for retirement.

This is part of Dave Ramsey’s 7 step approach to financial freedom and while I don’t agree with everything he says, I really do like these steps.

3. Tips for Reducing Your Monthly Bills

If you are having difficulty saving 20% of your income, you have one of two options. You either increase your income or lower your monthly bills. It’s that simple/

While increasing your income is ideal, it doesn’t happen overnight, but you can actually reduce your monthly bills pretty quickly. 

Here are tips for reducing your monthly expenses.

1. Track Your Monthly Bills on a Budget Spreadsheet

The first step to reducing your monthly bills is to know where your money is going. List all your monthly expenses. How much does your food, mortgage, auto loans, insurance, subscriptions, groceries, and fuel cost you each month? 

Once you have everything listed, compare your income to your expense to see what percentage pays your bills. Scary I know, but the bottom line is – if you are spending too much, you need to lower your bills. 

I personally use an app called Mint to help me track all of my monthly bills and spending habits. Check out my article here to learn more about them. Oo and Mint is completely free by the way!

2. Change Your Lifestyle

Think about the things you do in your life that you consider necessary, yet they are not. For example, if you enjoy fine dining and you do it at least three times a week, I’m sorry, it is time to make a change. 

This doesn’t mean completely abandoning the things that give you pleasure. Rather, you should just reduce the frequency.

How often do you use streaming services that cost you hundreds of dollars annually? You should cancel those that you don’t use often. 

The decision to let go of some subscriptions and membership fees is easier for people living alone. If you have family, you need to sit them down and discuss which subscriptions to remove from your monthly bills. 

By the way, I’m not crazy, I’m not talking about Netflix here of course.

Recommended Financial Geek Article: 18 (Uncomplicated) Smart Money Moves For Your 20s

3. Trade-In Your Car

Trading in your car is probably a very hard decision to make, especially if you have sentimental attachment to it. However, if the auto loan, insurance, and running costs take a chunk off your income, you should consider a cheaper alternative. 

If this decision is tough to make, consider it a temporary solution. When you have a sizable emergency fund and can afford to spend more, you could always go back to driving your dream car.

And hey, take this piece of advice from me. I did exactly this. I legit sold my car and bought a piece of you know what for $2,500. And I have to say, it has had only a positive impact on my overall happiness.

Not only do I have more disposable income each month, but I also don’t care about any dings or scrapes I get on my car as I know it’s just a temporary vehicle.

3 Tips for Increasing Your Monthly Income

As you try to find ways to increase your savings, one thing to keep in mind is your problems will reduce if you increase your monthly income. This way, you won’t feel like all you do is work to live. A higher monthly income will allow you to save and indulge in things that make your life more enjoyable. 

These tips will help increase your monthly income.

1. Monetize Your Website, Vlog, or Blog

Having a passive income is one of the best ways to increase your income. If you have a website, place ads on your site, such that every time a visitor clicks or views the ad, you earn money. 

It takes time and passion to create content that attracts visitors. But once you become an authority, your site will have many visitors who will earn you sustainable passive income. SocialBlade estimates that if your YouTube channel has at least 1,000 views daily, you may earn an extra $1,440 annually .  

2. Choose a Shift That Earns Your More

Working more hours guarantees you more income. However, you may still earn more by working on days that others consider inconvenient. For example, if your employer offers extra pay for working during the holidays, you can take up these hours. 

You can choose to celebrate special events on days when you are not working. For example, if working on Thanksgiving earns you more money, you can choose to have a thanksgiving dinner over the weekend instead of Thursday. 

Hot take here, but thanksgiving dinner is overrated! I said what I said!

3. Turn Your Passion to a Side Hustle

Did you know that the things you enjoy doing can earn you extra income? Whether you enjoy cooking, gardening, yoga, hiking, shopping, carpentry, healthy living, or art, you can turn your hobby into a business. 

For instance, you can become an instructor on platforms like Udemy that offer tutorials on various subjects for people seeking to learn skills that will earn them money. Alternatively, you can write ebooks, make tutorial videos for sale, or even provide a service. 

Recommended Financial Geek Article: 9 Legit Ways You Can Make $1,500 a Month From Home

Conclusion

Sometimes it feels like your bills are taking over your finances, and you have no control of them. However, you can take steps to either reduce your monthly bill or increase your monthly income.

As always, thanks for reading folks. I really hope this article provided you with valuable information, but even more importantly, the information you were looking for.

Geek, out.

Noel Moffatt

Noel Moffatt is the founder and main contributor for his blog - The Financial Geek. Based in Canada, Noel's passion for personal finance has helped him amass over 300k readers to his Financial Geek blog.

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