About the Savings and Spending Budget

This budget strategy, developed by the editors at MSN Money, helps you limit your monthly spending so that your savings grow quickly. The key is to hold your committed expenses to 60% of your gross income. You can track your savings, track debt reduction, and limit your spending in whatever level of detail that you want.

With this strategy, you focus on five high-level budget groups:

Committed expenses. These expenses, about 60% of your budget, include the regular, necessary expenses that we all incur, such as mortgage or rent payments, food and clothing, bills, and taxes. In this budget, they also include any items that you have "committed" to every month, such as music lessons for your children.

Irregular expenses. The real budget busters aren't the occasional movie or dinner out. Rather, the culprits are unplanned car repairs that you have to put on your credit card, or holiday spending that you didn't plan. About 10% of your gross income in a savings account should cover these items for most people, but you can customize that number.

Savings and debt. Getting rid of credit card debt is key to financial health. Money recommends that you dedicate 10% of your gross income to this important goal, but you can do less or more. If you have no credit card debt, allocate 10% of your income to staying out of debt by saving for big budget-busters like a new car or roof.

Retirement. A good goal is to set aside 10% of your total (gross) income for retirement (even if you're paying off debt). But you can start with an amount that feels most comfortable to you and adjust it later on.

Fun money. This is essential to a successful budget. If you don't plan for fun, you run the risk of busting your budget or quitting altogether. Money recommends that you use 10% of your total income for fun, but you can choose the percentage that's right for you.