Published: Wednesday, 30 Jul 2008 | 4:32 PM ET

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By: Carmen Wong Ulrich
On The Money Host

I was on the TODAY show Wednesday where I got to present one of my favorite budgeting devices: The Pie. No matter what your income, keeping certain 'optimal' percentages in mind--especially on the big-budget items like housing and transportation--of where your money should be going every month offers solid guidelines that will protect you when times get tight and offer you options to save and grow your money when the money's rolling in. Here's a breakdown of what I chatted on with Al Roker:

Whether you're a renter or buyer, put away 30% of your monthly take-home income for housing costs. This includes a mortgage or lease, taxes and insurance.

Transportation should make up no more than 18% of your expenses. If you drive, make sure you count gas, insurance, maintenance and parking. If you use public transportation, include your commuter pass or rail card.

If you have debt, paying it down should not exceed 10% of your monthly income. If you're lucky enough to be debt free, use this slice of the pie toward something else, like savings, or as an emergency fund.

Give food, toiletries and other things you need on a daily basis no more than 14% of your pie. This is a tricky one, because as food prices go up you will see that it becomes hard to keep your expenses flat and you may have to find the money by borrowing from another slice.

Put 7% toward household costs, such as energy, phone and cable bills. And even though it's summer now, don't forget about that massive heating bill that's coming to your mailbox in a few months. Plan accordingly.

Socking away 10% of your take-home income (or more) for savings purposes is important for two reasons: you can use this money for short-term items like vacations as well as longer-term goals like retirement.

Finally, 11% of the money pie should be allocated for "everything else." What's that include? Whatever's been left out. Charity, clothing, childcare, additional medical costs and other miscellaneous costs.

Use these guidelines to make your own money chart. You might be surprised to see where all that cash is going -- and you'll be able to tell where and when expenses are getting out of whack.

Got your own budgeting question? Use the form below to send Carmen an e-mail.

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