Ask the Dollar Diva By Dorothy Rosen • Bankrate.com

How do I budget my big salary?

Dear Dollar Diva,
Where can we find the "approximate" percentages allocated to various expenses by families with an annual income of about $200,000? I realize it's an individual thing, and the percentages would shift with higher incomes. We have never kept a budget, and have no idea how much to allocate to each category. I have been desperately searching to find typical percentages for budget categories like housing, food, clothing, transportation, etc.

Our children are gone, and my company offered no retirement or pension plan; we've got to start saving for retirement.

Budget allocations are more a matter of lifestyle than income. For example, a big spender with a $200,000 annual gross income might allocate more than 10 percent of his income to transportation because his family leases new luxury cars each year. A conservative spender with the same income might allocate next to nothing because his family buys older, moderate priced cars, and drives them until they wear out.

The conservative spender has more to allocate to savings than the big spender, so even with the same income, their spending percentages will be very different.

Having said that, the Diva presents this table of spending guidelines from the Mississippi State U. Extension Service.

If you like this stuff, you'll find another chart in Consolidated Credit Counseling Services Inc.'s "How are Americans Spending Their Money?"

Warning: Don't fall in love with these percentages. The Diva is giving them to you because you asked for them, not because she thinks they're where you ought to be. It doesn't matter how much the Joneses spend. What matters is how much you spend, and what adjustments you have to make in your spending to reach your goals.

Setting Goals

Before you start fooling around with a budget, set goals for yourself: like saving for retirement, or buying a new car. Once you've set the goals, determine how much you'll have to save each month to achieve them. For a quick and dirty estimate of what you'll have to set aside for the new car, go to Bankrate.com's calculator "What will it take to save for a goal?"

There are a number of retirement planning calculators on the Web. Just type "retirement calculator" into your favorite search engine, and you'll find enough of them to keep you busy for the rest of the week. Don't expect to uncover the Holy Grail; different calculators will give you different answers. Think estimates. Think ballpark.

Budget

The Diva's "How to create a budget" will walk you through the budgeting process in three steps:

• Estimated budget: where you think your money is going now
• Actual budget: where your money is really going now
• Projected budget: where your money will be going in the future

In order to succeed, you need to take the time to monitor your spending each month. Leaving this step out could be dangerous to your financial future.

DOROTHY ROSEN has a master's degree in finance, with a specialization in accounting, from the Kellogg Graduate School at Northwestern University in Evanston, Ill. Rosen has more than 15 years of experience in the financial arena, serving in Illinois and Florida as a certified public accountant, financial consultant, expert witness and educator. She is owner of Dorothy Rosen, CPA, a public accounting firm that serves individuals and small businesses.