Managing income and spending

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Over the last year or so I've begun living alone, independently, and have been on the verge of being overwhelmed by all the monthly costs I'm now having to keep track of. I'm trying to stay on top of my finances and keep things simple, but as I don't have any standards to compare my monthly income/costs to, it's difficult to tell whether I'm doing OK or not.

I was wondering if anyone could give me some insight into how much disposable income would be considered good, working a full time job long term? Right now, after rent, taxes, utilities, car insurance, etc, are deducted, I have a little less than half of my monthly pay leftover - maybe as little as 1/3 after groceries and such. With nothing to compare this to, I really have no idea if I should be cutting back or allowing myself to spend more freely.

I suppose it depends on various things, really - such as what sort of state your bank balance is in in the first place (if it doesn't have very much in it, then you should try and save up some contingency money), or if some of your monthly bills can vary from time to time. For instance, in winter my heating bill is annoyingly high, so as to make buying other things difficult, unless I have saved up during the warmer months to cover it.

I would have said that it is wise to make sure you have at least enough in your bank account to cover unexpected things happening, like a fine or a security deposit if you have to move at short notice. I myself find it comforting to be very careful and save as much as I can, and then if I see something that I want to buy for myself I can do so comfortably without guilt or ruining my weekly budget. I like to put away about £30 a week, if I can. It doesn't always work out, but it is helpful to set something like this to work towards. That way you have both the comfort of knowing that you are being prudent with your finances and that this will pay off, and the security of a sum of money behind you if ever it's needed. There is no particular amount of money that someone 'should' save - in the end, it's whatever suits you best and stops you from worrying.

(I'm on benefits, though - so it's not quite the same as for you).

Let's start with a budget for the necessities (it sounds like you have already done this).

Rent
Utilities
Car (with the subcategories of insurance, maintenance, gas, parking and replacement savings) - if you have a car
Transportation (public transit or taxis if you don't have a car)
Health Insurance
Basic groceries

After that, there are a few budget items that I strongly recommend:

Emergency Savings. This is a small amount that you save each month and keep in a separate, interest baring account. You don't touch this savings except for emergencies (such as paying the deductible on your car insurance should you get into an accident). This emergency savings will prevent you from using your credit card for emergencies (which can cause extreme financial stress).

Basic Clothing Savings. Unless you have a source of free clothes or belong to a nudist colony - you need to get a new pair of pants or underwear once in a while. Budget for this.

Basic Recreation/Entertainment. This covers things like video games, movies/dvds, fitness center fees, swimming, ice skating, playing pool, bowling or ??? whatever it is you like to do on a regular basis for fun.

Retirement savings - this is money that you are setting aside LONG TERM. You will not work forever and you will need some money when you are in your late 60's or 70's (and 80's and 90's). Start saving NOW! You don't have to put this money into fancy investment schemes. Even a registered GIC would do you well if you start now.

Other replacement costs savings - you noticed that I suggested that you budget for a car replacement cost. Eventually, the car will cost more to maintain than it will be replace. Start saving for your car replacement now. In 10 years (or 15 or ???) you will have a chunk of money to either purchase outright or make a big down payment on a new or used vehicle to replace the one that you have now. This can be applied to other things as well - eventually you will need a new mattress or a new tv or ??? Think of the big ticket items that you have that will need replacing in the coming years. Save for them now.

After you have crunched all these number and played with them - the amount that you have left is your discretionary spending. Use this for luxuries and treating yourself once in a while.

The important thing is to consider those budgetary items that are not obvious (like rent, car insurance, etc). These are the ones that can make or break you.

I have been budgeting like this for several years now. I owe nothing on credit cards or line of credit and have a good savings base and retirement savings. It works.