The “B” word is reentering the economic fray. Budget is a top search on Google, as debt-ridden Americans frantically hunt down ways to create a manageable personal budget. Each week on Bank of Mom & Dad I present our ladies with a personal spending plan or budget that, should they practice, will get them closer to financial freedom.  All the daughters on the show have debt so “debt repayment” becomes a mandatory part of their spending plan. If you don’t have the burden of debt your budget can offer room for more saving and more enjoyable expenses.  So how much to spend on needs versus wants? How to make the most of your hard-earned money? If you are in serious debt, consult a credit counselor who can help devise a more strategic pay-off plan and budget for you.

Everybody else, consider these percentage guidelines below. I’ve kept in mind that the average household income in this country is roughly $46,000 a year. After taxes and deductions for a health care plan, social security, etc., the monthly take-home pay ends up being around $2500 give or take.

Bear in mind that this is just a general guideline. In some cases (hopefully) you won’t have any credit card debt, leaving you with 30% of your take-home pay to play with and sprinkle throughout other areas of your life. (and that’s a good thing.)

RETIREMENT – 10%
We often neglect to properly save for retirement because it feels like there’s plenty of time to save later, especially when living paycheck to paycheck now. Remember: social security is not all it was cut out to be and the younger you are, the less likely you will much, if any, money from the government. For those in their 20s, start by automatically investing at least up to 10% in your employer’s 401k program. For everyone else, store away at least the minimum amount your company will match. Believe it or not – 60 percent of 401(k) participants do not contribute enough to obtain the full company match. That’s free money sitting on the table! Additionally, consider opening an individual retirement account or IRA at your local bank – either a ROTH or a traditional plan. Which one you choose depends on your income level and what tax benefits you’d prefer.

PERSONAL SAVINGS – 10%
Having at least six months of your take-home pay in a liquid savings account for a rainy day or cash emergency is a true measure of financial freedom. Take at least 10% of your paycheck and automatically put it towards either an FDIC-insured money market account or a interest-bearing savings account. Online bank accounts at HSBC Direct and ING Direct currently offer some of the highest interest rates. Make sure to shop around at www.bankingmyway.com

LOANS, INCLUDING CREDIT CARD DEBT – 20%
This may seem like an aggressive budget for paying down debt. While in years past we may have gotten away with just paying the minimum balance every month, carrying too much debt is a serious impediment to financial security these days. The best interest rates on bank loans are going to applicants with credit scores of 740 or higher. A high credit utilization ratio (i.e. more than 30%) will take a major bite out of your credit score. As you roll your eyes at this 20% allocation, remember that Americans have racked up close to a $1 trillion in credit card debt and with the economy in turmoil; households are not in any position to absorb that. We have enough to worry about with rising unemployment, depreciating home values and higher prices for food and gas. As individuals, there’s little we can do to change the macro economic hardships, but we do have the power to erase personal debt. Attack your credit card debt by reducing your balance on your highest interest rate credit card first. If your debt is far too difficult to manage, consult a credit counselor. Search for a certified counselor in your area at the website for the National Foundation for Credit Counseling, www.nfcc.org.

HOUSING, INCLUDING RENT OR MORTGAGE, INSURANCE AND UTILITIES – 30-35%
If your mortgage is getting out of hand, call your bank immediately. Banks have several refinancing and restructuring options to help you make your payments and avoid foreclosure. To reduce your utilities expenditure, consider just using your cell phone plan and save at least $25 a month on a landline. If you need to make international calls, encourage your overseas friends and family to join you in signing up for Skype.com, which offers free VOIP (voice-over-internet-protocol) services.

TRANSPORTATION, INCLUDING CAR PAYMENTS, GAS AND INSURANCE – 15%
One way to reduce your car payment is to refinance to a better loan with a lower rate. To reduce your insurance payment, opt for a plan with a higher premium. That may reduce your monthly payment by up to 30%. It also helps to have a strong credit history (another reason to aggressively pay down debt). To save on gas, carpooling is an obvious answer, but little things like emptying your trunk, inflating your tires and driving five miles below speed limit can increase your car’s fuel efficiency.

FOOD – 5-10%
The average two-person household spends $200 a month on groceries in America. Save a quick $50 just opting for basic brands. Buying generic brand grocery items instead of upscale labels can help save up to 50% on everyday food and household products. Want to cut another $30 to $50 a month? Reduce your eating out habits in half, since families spend more than 40% of their food budget on dining out, according to Consumer Reports.

MISCELLANEOUS, INLCUDING ENTERTAINMENT, TRAVEL AND SHOPPING – 5%
Now that you’ve covered your needs, you can spring for your wants. At this point, you’re probably left with somewhere between 5 and 10% of your disposable income (and that might be generous). This includes clothing, concert tickets, etc. As an incentive to paying off your debt, you’ll be left with more money for this category.