What budget categories should I include?
List all of these: Income, housing, utilities, food, transportation, insurance, debt payments, savings, health care, personal spending, entertainment, and irregular yearly expenses. Start broad, and get more specific only as needed to help you make decisions. List the bills you actually pay and how much you actually spend.
Budget categories to include
Your budget should have enough categories to track your spending, but if there are too many, tracking the budget can become difficult. You may want to begin with these categories and then adjust them according to your lifestyle:
- Housing mortgage or rent payments, property taxes, home maintenance and repairs.
- Utilities & Services: electricity, water, heating, internet, phone, and subscriptions
- Food: groceries, take-out, restaurants, coffee, and food bought at work
- Transportation gas, bus fare, parking, repair bills, loan payments, registration, etc.
- Insurance & healthcare: insurance premiums, prescriptions, doctor's visits, and other medical costs.
- Debt payments: minimum payment plus any additional payment amount you wish to make.
- Savings and goals Emergency savings, retirement, travel, education, and planned purchases.
- Personal and household expenditures: Clothes, toiletries, household goods, presents and pets.
- Entertainment hobbies, events, games, and other leisure activities.
- Annual or infrequent expenses: holidays, renewals, taxes, repairs, school expenses and special occasions.
If you have limited income, it is helpful to divide your spending into two groups, the bills you have to pay and the bills you would like to pay. When cash is short, it is easier to see what you should cut.
There's no need for a separate category for every store or minor purchase. Start off with one food category, for instance. If you're having problems with dining out, you could always split food into groceries and restaurants at a later time.
Review your spending categories after a few weeks or months. If there are any that you rarely visit, merge them together. If there are those that are routinely concealing overspending, divide them up. Ideally, your budget should be easy to grasp at a glance and not something you constantly delay updating.