Top 5 Categories To Include in A Budget | Money Struggle Success

What Categories to Include in a Budget?

When creating a budget, you should consider all of your expenses. These categories include everything from professional licenses to season tickets to your favorite football team. 

If you have more than one of these categories, you need to divide the total by 12 to account for the savings per month. 

Listed below are some examples of categories to include in a budget. Hopefully, this information will help you in developing your own budget. 

And if you have trouble figuring out where to start, consider using this budgeting tip to help you create a plan for all of your expenses.

Savings

There are two types of savings categories. These are essential and discretionary. It is important to include both in your budget. 

Your discretionary spending should include entertainment. However, if you do not have extra money for entertainment, you might not be able to make necessary purchases. 

You can find low-cost hobbies to pass the time. Entertainment is important for your mental health, but if you are in a budget crunch, you may want to scale back on entertainment.

Investments

When creating a budget, there are a few things you should keep in mind. 

While you should keep in mind that you will likely have many expenses, you should still consider how you can save money. 

If you spend less on entertainment and eating out, you will have enough money to start an investing program. Add a line item to your budget for investments. 

You should also start building an emergency fund and putting money aside for three to six months of living expenses. 

It is a good idea to deposit a portion of your paycheck into this account.

Retirement fund

To begin planning your retirement fund, you should first take a look at your most recent bank statement and identify the major expenses you currently spend. 

Try to maintain the same standard of living in retirement. If possible, you should try to avoid adding to your mortgage debt. 

Once you have identified the major categories that need to be included in your retirement budget, you can brainstorm the rest of your expenses. 

To help you plan your retirement fund, check our post how to plan your retirement fund for some tips.

Emergency fund

A few different emergency fund categories are important to keep in mind. Medical expenses are predictable, but funeral costs aren't. 

Unexpected home repairs and major car repairs aren't always predictable. BillCutterz can help negotiate lower bills from service providers. 

If you're married or living with someone, you should figure out how much each of you spends each month. 

Creating an emergency fund is essential to making sure you have enough money in case of an emergency.

Shopping

The first step in creating a budget for your shopping habits is to review your past expenses. These expenses include everything from clothes to dry cleaning and everything in between. 

You should also account for the cost of paying your mortgage or rent. 

Other common categories include car finance, overdraft fees, gas and electric, broadband, and council tax. 

The second most common category is shopping, which varies depending on your personal style and spending habits.