Does your budget suck? – Budget Categories

Lately, I have been having a good amount of people asking me for help with their budget and creating a budget. This includes my sister, my friends, and readers.

It seems like a lot of people aren’t sure what to put in their budget, or how to even start their budget. How to budget is such an important question though!

I know that not everyone has a budget, and some personal finance bloggers don’t even believe in a budget. However, I think budgets are important because it can help you reach your financial goals. Learning how to budget correctly can change a person’s life.

Some people think that budgets are only for people who are living paycheck to paycheck or people who have no money. WRONG.

Budgets help people manage their money better, it’s that plain and simple. A budget can help you realize where you might be going wrong with your finances and how to fix the financial issue that you may be having.  Budgets also help you designate a certain amount of money that you feel comfortable with to certain areas, such as investments.

Different people spend different amounts in their budgeting categories. A lot of this depends on what is important to you (some hate to spend a penny on their cars, whereas others love having cars). Some people live in high cost of living areas such as New York City.

How much do you spend on your budgeting categories? It would be awesome if you all would share what percentage housing, car and food is in your budget. I would love to compare!

Whether you are looking for tips on how to create a family budget, how to create a single person’s budget, and so on, read my tips below for budgeting help and tips on how to budget correctly. The below is pretty much a budget calculator and is really all you need. A budget does not need to be fancy and you don’t need a fancy budget calculator in order for it to work.

Add up your income when creating a budget.

Income can be from various sources. If your income varies from month to month, I would take an average of what you are used to making. I’ve heard of some people using their income before taxes, but I don’t recommend this unless you also have a budget category expense for taxes.

A recurring theme that you will find in this budget post is that you should be realistic about everything. Be realistic about what you make and what you spend. If your income or expenses fluctuate every month, or week-to-week, be sure to find a comfortable average for your budget and what you are looking for in your budget.

• Day job – Is your income hourly or salary?
• Rental income – Be very realistic with your rental income, and be sure to factor in expenses.
• Side jobs – If you have side jobs, of course add that in also.
• Passive income

I don’t usually think that you should count bonuses. Unless it’s a 100% fact that you will be receiving a bonus, then including them in your budge is not usually the best thing to do. Your budget should be realistic, not fairytale.

Add up your expenses when creating a budget.

Have you ever truly added up your expenses for the previous month? Many people estimate a lot of their budgeting categories, but you should be taking your realistic expenses and putting them in your budget. Making a budget category of $0 for fun/entertainment is most likely not very realistic.

• House – This includes all housing expenses of course: house payment, maintenance, utilities, insurance, property taxes, etc.
• Car – This includes all car expenses such as your monthly car payment, gas, maintenance, insurance license plate fees and so on.
• Television, cable, cell phone, internet, and so on – all self explanatory.
• Food – This includes all groceries. Seriously, sit down one day and add up your food expenses for the month before.
• Clothing – We actually do not break clothing down in our budget, and just throw it into miscellaneous. However, we should change this. If you regularly spend money on clothes, then you should be realistic and make this a budget category.
• Entertainment – Entertainment can include many things, such as going out to eat, going to the movies, going out for drinks, and so on. Make sure this is realistic in your budget!
• Charity – If you regularly donate to charity, then this should definitely be a budget category.
• Savings funds – This can be for your wedding, travel, something that you want such as a camera, or something else.
• Taxes – If you are self-employed then taxes will most likely consist of a large part of your budget.
• Miscellaneous – pet expenses (you might want to break this into it’s own category if your pet expenses are fairly high), any fees, childcare, gifts, etc.

Other categories that you might want to add might include school, health insurance, wedding, and so on.

Do you have a budget? What tips do you have for someone who is learning how to budget?