If you sit down to create a budget for the first time, it can seem overwhelming. You need to try and remember what you spend, where you spend it, and how much income you bring home. When getting started, it helps tremendously to have a master list of budget categories.
With the category list, you can start figuring out how you want your budget organized and might remember expenses you’ve forgotten to account for. You can do all top-level categories, such as using “Utilities”. Another way is to break categories down further into line items, such as under the “Utilities” heading with water, gas, electric, and phone. This helps you know where your money is going. In this example, you might see your water usage is a bit out of control and reign it in.
I have put together a list of budget categories that have been useful for me. If you don’t have children, some line items would go away. Same if you rent rather than own a home. You might have categories that I haven’t thought of that are specific to your situation. You might even be able to finally categorize those ukulele lessons.
Your income is important to understand. There is your gross income, or base pay. But what you really want to track is the income you bring home, because that is what you use to pay all your expenses.
While you want to track all income, only rely on guaranteed income for budgeting purposes when allocating money in your budget categories. You aren’t going to want to rely on a birthday gift from aunt Mildred to pay for that nice dinner.
Income that is not guaranteed is nice to help pay down debt or build up savings faster, or use for a little fun money.
Examples of income categories:
- Salary or wages
- Expense reimbursements
- Dividends and capital gains
- Side job income
- Tax refund
- Child support
Keeping a roof over your head is a necessary expense. This will include not only rent or mortgage payments, but other items as well. You will want to budget for maintenance and repairs, fees, furnishings, and taxes.
- Mortgage insurance
- Property taxes
- Repairs and maintenance
- Yard and garden
- HOA fees
You have to eat, so food is another one of the essential budget categories you will want to track. Food will include not only your groceries but the food at restaurants, alcohol, coffee shop expenses and even your kids’ school lunches.
Breaking down this category helps you track expenses so you can see if you are spending too much dining out or partying a bit too hearty.
- Dining out
- School lunch
Having running water and electricity certainly makes life much more enjoyable. And yes, you have to pay for it.
Unless your only mode of transportation is your feet, you will have transportation costs to track. Even a bike needs tires and maintenance. For cars, you want to remember there are more costs involved other than just gas and an occasional oil change.
- Fare (public transport)
I have yet to come across someone that has never been injured or sick. You most likely at least go in for the occasional check-up and dental cleaning.
Health care is expensive and is something that you really do need to budget for. There are co-pays, bandages, vitamins and lab tests that would fit in the health budget category.
- Massage therapist
- OTC medications/bandages
- Eyeglasses/hearing aids/medical devices
Insurance helps pay for expenses you need to cover but can’t afford. Sometimes, having insurance is even required by law (auto insurance, perhaps health insurance) or by your lender, such as homeowner’s insurance.
- Roadside Assistance
“Pay yourself first” is an oft-repeated bit of advice in the finance world, and for good reason. Saving for current and future needs is important. It includes money set aside in an emergency fund, retirement accounts, and college savings accounts.
- College fund
- Emergency fund
If you normally give to charities or your church, include this budget item.
- Specific Needs (ex: GoFundMe fundraisers)
This is a bit of a catch-all for those household items that don’t really fall into other budget categories.
- Cleaning supplies
- Laundry supplies
Whether you are talking about yourself or your 8-year-old at the public elementary school, there are costs associated with education. Even with the younger set, the cost of school supplies and extra-curricular activities adds up.
- Field trips
- Extracurricular activities (music lessons, school sports)
This is another catch-all category for personal expenditures. If you have a family, costs of haircuts, sports fees, makeup, and clothes can get expensive.
- Grooming (waxes, manicures, etc)
- Fitness memberships or equipment
- Dry cleaning
Not paying your debts can create financial problems, so set up this category to break down each debt payment as a separate line item. Debt payments here would include student loan payments, credit card payments, outstanding medical bills, and personal loans. Normally a mortgage payment would be listed under the Housing category, but you could have it listed here, instead.
- Student loan
- Car loan
- Credit card
- Personal loan
- Hospital bill
Gifting seems to be one of the forgotten budget categories. When that birthday or the holidays roll around, you might be scrambling for money to buy a gift.
Entertainment and Fun
Are entertainment and fun the same thing? Different? I’ll let you decide. We all need a bit of downtime whether it is playing games, watching a movie, knitting or going on vacation.
You should budget your fun money. There are so many things that fall into this category that costs can balloon if you are not careful. Enjoy yourself without overspending.
- Movies (including Netflix)
- Sporting events
If you have a young child in daycare, you know how expensive it is. In some areas, it is more expensive than college. Even as your child gets older there are expenses such as camps or the occasional babysitter. If you pay child support, you would list this here as well.
- Child support
- Necessities not accounted for elsewhere (car seat, stroller, diapers)
Pets are a wonderful addition to any family. They do, however, have their own set of associated expenses. Fido will want to eat, play with toys, and will need to see the vet.
There is always something that crops up that doesn’t seem to fit in anywhere. Thus, the ultimate catch-all category of Miscellaneous.
- Cash (unaccounted for)
- Office supplies
- Kids’ allowance
- Safe deposit box fee
Your budget categories
A personal budget is personal. You can adjust these categories to better suit your needs. Maybe you want to put homeowner’s insurance under Housing rather than Insurance and medical insurance under Health costs. Do whatever makes the most sense to you and accounts for your income and spending. If the organization isn’t working for you, change it.
I hope this list gives you a good start in making a good budget to track your spending.
Do you include any other expenses or budget categories?