What budget categories do I need to include in my monthly budget?

Budgets are hard. Even after over a decade of actively tweaking my budget (and then writing about it on this website), I still struggle with staying on budget. Beyond staying on the budget, I have a hard time effectively and efficiently categorizing all of my expenses. I get like 90% of them into buckets, but there's always something that throws me for a loop each month. I've written this primer on how to write your first budget (or do a new one if you're in a new phase of life, like post-divorce or something), but I recently realized that if I'm struggling with budget categories, maybe someone else is too. So, I put together this supplemental piece. Okay? Onward!

The basic budget categories

When it comes to budget categories, it's important to have a clear understanding of your expenses and income. Because a budget isn't just what you spend, it's what you earn too! Some sample budget categories you might consider include housing (rent or mortgage), utilities (electricity, water, gas), transportation (car payments, gas, public transportation), groceries, insurance (health, car, home), debt payments (credit cards, loans), and savings (emergency fund, retirement).

You can snag my free budget printable here or get my excel tracker premium product in my shop.

But what about my more “spendy” budget categories?

Everyone knows you should have a budget category for housing and utilities and groceries and gas, but what about your “free” spending money? How do you account for every single thing you spend on each month without driving yourself bananas?

The answer here isn't a quick and easy fix. To really ascertain what your individual budget categories need to be, you need to track your own spending for a month, if not two or three.

Diligently tracking your spending will show you what things you freely spend on every month. The longer you track it, the more you'll be able to see what you pay for monthly vs. quarterly or annually. You really can't have too much data when it comes to tracking your own spending, so I recommend really digging in.

Once you've tracked your spending for a minute and have “the data” you'll then be able to see what categories to align in your own personal budget. Generally speaking here are the ones from my template (and from my own life as an elder-milliennial lady who denies herself absolutely nothing):

• Personal Care/Beauty – Nails, haircuts, etc.
• Therapy
• Entertainment
• Eating Out
• Travel
• Gifts
• Christmas (separate from “gifts” for the rest of the year, by the way)
• Gym/Health-related spending
• Laundry
• Household Items
• Home Projects – more decorative projects than home maintenance. (Read on for more about how to accommodate for

Above are just guidelines and what I spend my own money on. If there's anything you're consistently spending money on each month — you need to have a separate budget category for it. Period.

In order to create a comprehensive budget, you'll want to make sure you include all of your regular expenses as well as any irregular or one-time expenses that may come up. (Things like vehicle registration, or maybe a ticket to a niece or nephews play.)

But what about budget categories I may miss?

Frequently missed budget categories can vary depending on individual circumstances, but some common ones include subscriptions (streaming services, gym memberships), home maintenance and repairs, gifts and celebrations, and pet expenses.

I have two big “fixes” for budget categories that aren't as cut-and-dry: sinking funds, and a catch all category.

My “catch all” category

No more than $100 dollars, I file expenses here each month that don't really fit anywhere else. Having this cushion keeps me from completely blowing my budget and ending up in credit card debt.

Sinking Funds

Sinking funds are a fabulous way to account for one-time expenses in your monthly budget, because you're saving for them as you go. So, for example, I pay car insurance bi-annually. I just take the amount ($1200) and divide by 12 and ensure I'm always automating $100 into my sinking fund for that expenditure so when it comes due in April and October, I have enough to cover it.

It's a more “hands on” and micro-level approach to budgeting than I typically am in favor of, but utilizing sinking funds are the only way I've been able to consistently save for these larger one-time expenses and pay them off in real time. I love this primer on sinking funds from CNBC.

TL:DR

Isn't it so freeing that we can have a budget category for literally any damn thing we want? Because it's our money! And we get to say how we can spend it. There's really nothing better you can do with your money than spending it in alignment with your own personal values.

My final tip is this: It's important to review your budget regularly to ensure you're not overlooking any important categories, adjust often and tweak as necessary. Just as long as you're at least spending time with your budget and expenses each month, I think you are on the right financial track.