15 Budget Categories That Need To Be On Your Budget Plan

Creating your new budget? Stop right there! Find out which are the best budget categories that need to be on your budget plan before you start, so you make sure you’re on track to achieving your financial goals!

Having a budget is so important to managing your finances and being in charge of your daily expense habits and goals. If you’ve just decided to start budgeting, congratulations!

But, how do you do it? What categories should you include in your budget? No need to be overwhelmed; in this post you’ll find 15 indispensable categories that need to be on your budget plan, and which will get you started right away! 

Grab pen and paper (or open a Google Sheet) and start budgeting!

15 BUDGET CATEGORIES YOU SHOULD INCLUDE IN YOUR BUDGET PLAN

Income 

The first column is going to be your income, one of the basic budget categories that can’t be missing.

You need to know how much money comes in, to then budget what goes out, right? Here you’ll state all of your incomes, regardless of the frequency in which you receive them. Your main salary, for instance, will likely be the same every month, and so will be the rental income or child support if you have them.

But maybe you also receive bonuses twice a year, tax refunds, dividends, or interests on your investments, and all those revenue streams should also be stated in your income category. Now that you know how much you earn, it’s time to move on to the spending categories. 

Housing  

First and foremost, what likely takes most of your money are the bills and utilities of daily life. So we’ll now tackle your household budget category.

Here you’ll write down all the expenses related to housing, from rent to household items such as cleaning supplies, toilet paper & toiletries, coffee mugs, or a new toaster, and monthly bills which may include electricity, water, internet, and your phone. 

Food

This budget categories list also has a column for food. It should include all of your grocery shopping expenses, as well as restaurant meals, take-out orders, and drinks at the bar. Every penny that goes toward something you eat or drink gets noted down. 

While for the grocery shopping expenses you may simply state groceries, it can be useful to keep your shopping list handy if you have one, or write down the main items you bought, so you know what’s eating up your food budget and realize where you may need to make changes if that’s the case.

It may be you’re buying an obscene amount of last-minute candy from the cash register shelf, without even realizing how much it adds to your bill. Or fancy salad dressings you don’t actually need (and which you could easily make at home!)

Transportation

Whether you have your own car or take the bus to work every day, you’re constantly spending money on your transportation, so it’s one of those simple budget categories that we can’t leave out.

If you have a car, list all the expenses it carries, from gas to insurance, parking, and car payments. If you don’t, sum up your expenses on bus tickets, uber or taxi rides. Here you’ll also add plane tickets if you need to fly for work and the spending is on you. (If you only fly for fun, wait for the Travel category…)  

Entertainment

While it could be listed under the personal budget categories, entertainment these days usually comes in the form of monthly bills, so it’s important to track it carefully and in its own column.

This category is where we usually splurge a little bit, isn’t it? Entertainment means fun, so all the activities that you do for mere enjoyment will be neatly listed here. 

Start with the items that demand monthly payments, which are most likely subscriptions. Think of all the subscriptions you have, either for streaming services like Netflix or HBO Max, Spotify, Amazon Prime, magazines, etc.

Then, include the other entertainment activities you regularly spend on, like concerts, art exhibitions, books, or going to the theater. 

Health

Paying for health insurance is really important, and all of your medical expenses should have their own column.

Some months you’ll only have the health insurance payment written down, while others may include an emergency dentist appointment, the purchase of vitamins, birth control (depending on the method you use, you’ll either have to pay for it on a monthly basis or make a one-time purchase) and anything else related to your health and medical bills. 

Savings

Savings is a MUST category on your budget, and you need to contribute to it on a monthly basis. If you can afford it, start with 10% of your income; if that’s too much for now, contribute whatever you can to it, but do it! 

Savings can serve a number of purposes. They can go toward an emergency fund to pay for that dentist appointment, a car breakdown, or maybe to invest in a friend or family member’s great business idea. An emergency fund is just for that: an emergency, so whatever unexpected expenses come your way, you’re covered.

You could also be saving for a dream trip, to buy your own house, or pay your kids’ college tuition. Whatever your goal may be, make sure you pay for yourself with the same diligence as you pay your other home budget categories.

Retirement + Other Investments

One of the main reasons people save money is for retirement, but this should be an investment on its own.

Besides your regular savings account open a tax-advantaged one such as 401(k) or IRA for your retirement contributions. If you have a 401(k) plan, find out if your employer can match your contributions, and be consistent with them; it’s your future, after all! 

Of course, you should budget for them as well and see if you can increase the amount of your contributions over time. If you have any other investments going on, also list them in this category with their corresponding name and amount. 

Debt Payment

Whether it’s student loans, mortgage or a loan you got to buy your car, paying off debt is important, and it’s equally important to keep track of your payments.

This way you’ll know if you have chances of refinancing that debt, and how long you’ve got until it’s fully paid. It’s also useful to figure out how much you’ve paid for loans over the years, and see if you’re willing to go through it again if the occasion arises. 

Add to your budget a monthly expenses category to track your debt payments now!

Taxes

Another payment that’s not particularly fun, but which you need to budget for, is taxes. Knowing the exact amount of taxes you have to pay will help you organize your money and make sure you have enough left for these payments.

While most taxes may be deducted from your salary, some others, like property taxes, might need your active attention, and it’s important to budget for them. 

Travel 

While this isn’t one of the typical budget categories, it’s a really fun one and worthy of a spot. Travel can be a big, distant dream that you save on a yearly basis for, or it may be part of your regular life, either for visiting relatives, business, or for your own pleasure. Regardless of the frequency in which you travel, the expenses that traveling creates should be written down as well. 

Think of plane, bus, or train tickets, accommodation, meals, attractions, transportation, souvenirs…any expense related to your trip goes into the budget.

This will be a great reference when you start saving for future travels, and also give you an idea of which areas you spent the most, and if you can make your trips more affordable by booking cheaper hotels or restricting yourself in the souvenir department. Check out these hacks to save money when you travel.

Charity

One of the top Dave Ramsey budget categories is giving, and it’s a worthy expense to consider if you don’t already do it.

If you donate to charity on a regular basis, it’s a good idea to know how much, to which institution, person, or cause, and when you’re donating money. 

Sometimes your donation may be canned food or clothing items, or even your time to help organize a charitable event, and while those don’t necessarily need to be on your budget, knowing what you give can help you set new goals and work toward affording more donations, or diversifying more the organizations you donate to.

Money, however, should always always be in your budget, even if it’s going out for a good cause. Money that goes out of your pocket, is a little number that you write on your excel sheet (or whatever means you use for your budget) every time. 

Education

Among the family budget categories there’s a crucial one, and that’s education. If you’re still in school or have children, add this category to your budget, because studying costs money.

From tuiton fees to textbooks, supplies, or even school field trips, the expenses can be significant, so make sure you’re budgeting for them. 

Personal Care

And now to the enjoyable, personal expense categories. Doing your hair for an event, buying a new lipstick, or getting a massage after a stressful week are all personal care expenses.

Any item that you buy for your well-being and pampering, from nail polish to bath bombs, a day at the spa, or getting a new haircut, goes into this category. As you probably imagine, is not an essential, common budget category as housing or healthcare are, but it’s nice to know when you have some little extra to spare and you can use it to feel good.

It’s your hard work that makes the money, after all, and when all the important categories are paid for, you can enjoy a treat now and again. Or build a nice sum in the personal care section if you have a big event coming up which will require tons of pampering, like your sister’s wedding (or your own!) or graduation. 

Miscellaneous     

There can’t be a category for absolutely everything, can it? That’s why we have a miscellaneous one, where anything that doesn’t fit into the previous categories goes.

Birthday and Christmas presents could be noted in this section, a reusable water bottle to take to work, or a replacement for that ugly vase you broke at the office, but which you have to pay for nonetheless.

Whatever random purchase or expense that doesn’t seem to match any of the main categories, we now have an expense category to budget it.

If you’re now sketching your monthly budget categories, you’re already ahead of most people. But remember that a budget is useful when used and referred to frequently, and it can really be the basis of your financial shift and goal setting, so be consistent with the habit and enjoy the results. Happy budgeting!