What Categories to include in the Budget
Are you building your budget right now and still have money disappearing because your budget is not set up correctly? If that is the case, let’s talk about categories that your money could fall into, so it isn’t leaving and you not knowing where it went. Budgeting is a tool, and the categories are totally up to you. Wait, what? Yep, I can tell you the categories I recommend and that are frequently used, but ultimately you set the budget up how it works for you. This is because you make the money and you get to tell it how to work for you. When you are struggling to set up a budget or just getting started, I recommend a detailed budget with separate categories for different parts of life. When you are a millionaire and are debt free the budget can have more broad categories and less detail, but you still want to budget so that your money continues to help you reach your goals.
The top of your budget should be the things that are most important to you so that you are sending your money to those areas first. Think of categories like Giving, Saving, and Food, Housing, Utilities, and Transportation. After those things have money assigned to them, other important categories might include Insurance, Healthcare, and Personal Spending. Options for other categories might include Pets, Kids, Death, Lifestyle, Entertainment, and other month specific items (like Halloween costumes or candy, Thanksgiving Feast, Christmas, Birthdays).
When you have your categories, you can then break them down also into subcategories. So, let’s say you have a Christmas line item in the budget. You can break it down even further into Christmas Meal, Gifts, Decorations, Random Acts Giving. You can break Transportation down into Gas, Maintenance, Insurance, and even Uber/Lyft fees. Or if you have an Insurance category you might not want your auto insurance under transportation if you like it group better under this category, that’s fine again its your budget, do what make sense to you. So, your Insurance category might include separate categories of medical, dental, vision, auto, home, toys and life. Some people’s Insurance category might only say Insurance and it only covers their car because medical, dental, and vision come straight out of their paycheck, their home has insurance in escrow, they don’t have anyone relying on their income so, no life insurance and no other toys or vehicles. You have to make the budget fit your life not you trying to fit a predetermined form. Yes, there are helpful forms, I even have a free one available for download on blessedbeyondthestress.com and there are great apps available to assist, but remember a budget is supposed to be personal and help you win, not tell you what to do.
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