In order to have an effective budget, you’re going to need some basic personal budget categories to start. Determining your budget categories isn’t always easy, especially if you’ve never made a budget before. Start your budget off right . . . here are some of the best budgeting categories to set you off on the right foot.
Making Your First Budget
The budgeting categories listed below won’t do you any good unless you have some sound principles behind them.
Bob has written a great article on how to make a budget that includes how to make the “world’s easiest budget” and other budgeting methods designed to save you the most money possible.
In addition, you can read my personal steps for creating a budget including how to stay on track and setting up a bill reminder system.
70+ Basic Personal Budget Categories
Below I’ve listed many basic budgeting categories, but understand that these are not necessarily prioritized. Some are essential, some are recommended, and some are discretionary – it’s up to you to figure out which are which beyond what I’ve said below. I’ve added subcategories to each major category so you can further define your budgeting categories as needed. Remember, these are just to get you started, nothing more.
Giving
Giving puts money in perspective – and it also helps the community at large. It should be top priority on your budget.
- Tithing
- Offerings
- Charities
- Specific Needs – Consider creating a Giving Fund.
Food
You can’t survive without it. Food needs to be very high on your prioritized budget list.
- Groceries
- Restaurants
- Pet Food/Treats
Shelter
Nothing like a roof over your head. This one is important too, and make sure that you can afford whatever dwelling you choose!
- Mortgage
- Rent
- Property Taxes
- Household Repairs
- HOA Dues
Utilities
Don’t forget the importance of utilities. Some of these are more important than others. For example, you might choose to go without cable!
- Electricity
- Water
- Heating
- Garbage
- Phones
- Cable
- Internet
Clothing
Wear something. It’s kind of socially important. But don’t go overboard here with all the latest trends – that’s for your Fun Money category to manage.
- Children’s Clothing
- Adults’ Clothing
Transportation
Commute to work? Transportation is important. But you’re going to need more than gasoline and oil changes . . . .
- Fuel
- Tires
- Oil Changes
- Maintenance
- Parking Fees
- Repairs
- DMV Fees
- Vehicle Replacement – This should be for reasonable vehicle replacements, fancy add-ons should come from your Fun Money category.
Medical
Even if you are healthy and don’t have many medical expenditures, make sure you consider these categories.
- Primary Care
- Dental Care
- Specialty Care – Think orthodontics, optometrists, etc.
- Medications
- Medical Devices
Insurance
The goal of insurance is to pay for expenses you can’t afford but desperately need to cover. Raise your deductibles to save some money if you have a fully funded emergency fund.
- Health Insurance
- Homeowner’s Insurance
- Renter’s Insurance
- Auto Insurance
- Life Insurance
- Disability Insurance
- Identity Theft Protection
- Longterm Care Insurance
Household Items/Supplies
Look at your bank account and determine what household items and supplies you purchase throughout the month. Here are some common supplies . . . .
- Toiletries
- Laundry Detergent
- Dishwasher Detergent
- Cleaning Supplies
- Tools
Personal
This is just as it sounds. This category is a sort of “catch all” for anything having to do with you or your family personally. It can include subscriptions to personal items or services as well as other personal expenditures.
- Gym Memberships
- Hair Cuts
- Salon Services
- Cosmetics
- Babysitter
- Child Support
- Alimony
- Subscriptions
Debt Reduction
Reducing your debt is a vital part of your overall financial health. Adding and maintaining debt causes you to pay more for items and services than you should.
- Mortgage
- Credit Card
- Personal Loan
- Student Loan
Retirement
It’s important to have a retirement plan you can depend on. With Social Security wavering, who knows if you’ll be able to depend on the government for assistance. It is often recommended to save and invest for retirement as a high priority in your prioritized budget.
Education
Funding your family’s education is a great return on investment. Raise your income through education! Beware of funding your education through debt. Instead, save money up for your education needs.
- Financial Coaching
- Children’s College
- Your College
- School Supplies
- Books
- Conferences
Savings
Many financial experts recommend saving at least 10% of your income for various expenses. Here are the most common ones.
- Emergency Fund
- Hill and Valley Fund – For people with variable incomes.
- Other Savings – You can add other specific saving categories here where needed.
Gifts
Whether you’re saving for gifts for your spouse, family members, or friends, make sure you write out how much you intend on spending per person per occasion. You might need a spreadsheet for this to include in your budget.
- Birthday
- Anniversary
- Wedding
- Christmas
- Special Occasion
Fun Money
Everyone needs a little fun. If you don’t budget some fun money, you’ll end up spending money from categories you shouldn’t. Keep this category reasonably funded.
- Entertainment
- Games
- Eating Out
- Spontaneous Giving
- Vacations
- Subscriptions – Such as Netflix.
What did I forget? Do you have more budgeting categories to add to this list? Leave a comment below!
{ 7 comments… read them below or add one }
Wow – great list! My wife and I also have a category for “allowances” or “commissions” that we give to our kids every two weeks in exchange for work they do around our home.
Very good list, and I like the sequence. Under saving, I would specifically add: car replacement savings account. Cars are mechanical devices and they wear out. They’re also expensive and not easy to afford out of running expenses. And taking out a car loan is bad practice.
The best way to do it is to add a car payment to the expense budget and put that money into a dedicated savings account. That way, you can control the car replacement decision, rather than the car. (Oh, honey, the transmission gave out – what are we going to do?)
It’s a big enough item to warrant its own expense item and savings account.
Just a thought…
Great list! Thanks for sharing!
We also have adult allowances. This is money each spouse get’s each month to be used as he or she sees fit. Also we have a category for work related travel since one of our jobs often requires travel at least once a month.
Savings accounts: Save up and pay cash for vacations? Save up and pay cash for car insurance (get a discount by paying every 6 months instead of monthly)? Also for couples without children but who plan on expanding their family dedicating a savings account to future baby expenses might be a good idea? Kids are expensive but totally worth it!
This is a fantastic list. Typically, most such lists are much more brief, yet lacking in necessary distinction between expense types. This one is better, and allows for a more refined view of analysis later. Automating expenses and having them flow through to detailed categories can help.
Child care?
Why is there never a category for child care? Not all families has a stay-at-home mom (or dad). It may be by choice, by necessity, or because they have no choice (God bless the single parent!) but some families have some sort of child care cost.
Sorry for the little rant. I realize your list was not intended to be exhaustvie but I have yet to find a budgeting website/blog/article that actually recognizes some families have this expense.
Other outside-the-box categoris may be homeschooling costs, private school tuition and school supplies.
Great list, pretty thorough. I also include in my budget money for replacing vehicles, furniture and appliances, and computer equipment.
TAXES : We pay an estimated city income tax on a quarterly basis and have to budget for it monthly. I am a budget dufus and have no clue where I would add this in my categories.