Okay, now step four is a big one. We're moving on over to expenses. I like to put expenses into two categories, your needs and your wants. We're going to jump right in and start with what's most important needs. First up, rent. Joe and Sally pay $1,500 in rent.
That's a little reference in my area. That won't get you a one bedroom apartment in the suburbs where Joe and Sally live. That gets you about a three bedroom in a multi family house, or complex or small house. Okay, next, Joe and Sally have renter's insurance that runs them about $25 a month. And next we have electricity. To keep things simple.
We'll say that they have an all electric apartment or small home. You They average out about $150 a month. Now here, you want to take a glance at your bank statement and see how much you've spent on electricity in the past few months. If you find that it fluctuates quite a bit, you want to get a number that's less than average and closer to the higher amount. You want to make sure that you can cover this expense. And frankly, it's better to over budget than under budget.
Okay, so next cell phones, Joe and Sally got themselves a good family plan and pay $100 a month for three lines. Only one of their kids is old enough for a cell phone. They're also cutting corners and realize streaming is the new cable. So they forego the cable just for the internet. Which is 80 a month. They don't have the best plan.
Next up groceries. When I say groceries, I mean anything That's consumable food, drinks, paper plates, toilet paper, cleaning products, dog food, etc. Anything that gets used up and replaced. That being said, this is another one you're going to have to dig into your bank and credit card statements for. You want to make sure you end with a number that feels like you can cover all your expenses each month. Now, this might be a little off, I don't have children and only shop for two people and a small apartment with one dog.
But we're gonna give them and their kids $550 a month for groceries. Next step, all their vehicle expenses, one being car insurance. For the two cars they pay $210 a month in gas, running under the assumption that neither have a very long commute and somewhat fuel efficient vehicles. We're gonna put them at $300 a month. And lastly, let's throw in those car payments of $300 a month. And while we're on debt, let's get those credit cards in there.
If you recall the minimum payment for all three cards was $80. Now, you may say I missed some things like health insurance, but in this particular example, Joe, being a city employee has his family health insurance taken right out of his paycheck. So it won't come into play here. But if you have to pay for insurance separately added in. Okay, so now you can see all the needs of Joe and Sally's family are covered. Now let's add up Joe and Sally his expenses thus far, giving us a total of $3,295.
So take that number and subtract it from the original total income of $4,152. You get a remaining of 857 Now this is an ideal. An ideal situation would have put these needs at 50% of Joe and Sally's income. But as you're aware, in the real world, not everything is ideal. So next step, we want to budget Joe in Sally's wants. There are three primary types of wants within this category.
Number one, entertainment to include hobbies, and movies, purchasing a new video game, etc. Number two shopping. This section can also include that video game that you want to purchase. But for most this section consists of clothes or a pair of nice shoes. And number three is dining out to include date night or a family outing. Now these are once a category that is completely under your control.
You can choose to put however Much are however less in this section. So for Joe and Sally, we will give each category $100 a month. sum this up, Joe and Sally have budgeted $3,595 of their $4,152 towards their expenses, leaving them with a remaining $557 which we're going to take over to step five