Having a comprehensive list of budget categories is one of your first steps to successfully creating a budget.
We’ve all had the experience where we were excited to start saving, only to have some surprise expense crop up and bust our budget.
One way to get ahead of these budget “surprises” is with a comprehensive list of what we can expect each month.
Let’s take a look at a list of budget categories to see what we might be missing.
Table of Contents
Budget Categories: Long List or Short List?
The first thing you’ll want to consider when creating a list of household budget categories is the number of items on the list. There are two primary options to consider: long lists or short lists. Choosing which to use is up to you.
Let’s explore the two options in further detail.
Long List Budgeting Categories
With longer lists, you’ll be able to allocate your funds to a significant number of items. It’s ideal for organization, especially if you are managing your money down to the penny. However, it can also be overwhelming for many, especially if you have many monthly expenses.
Instead of allocating your cash to just 10 or 20 categories, you could have 50 or more expense categories.
Another consideration with maintaining a long list budget is that it can be significantly more time-consuming as well, which can reduce your motivation.
Even so, it’s often recommended for people who prefer a more precise approach to managing their spending.
Short List Home Budget Categories
Opting for short budgeting categories is a great place to start, especially for your first budget. You won’t feel overwhelmed by hundreds of categories, nor will you find it challenging to find your most important expenses.
Also, short list home budgets are much simpler to maintain, as you allocate larger chunks of money to essential categories.
The primary downfall to this process is that it might not be as specific as you want it to be.
How Many Budget Categories Do You Need?
Like deciding between a short and long list budget, the number of categories you’ll need will differ considerably. It really is a balance between what is manageable and what is effective.
For example, many households can get away with less than 10 categories while others prefer and use over 50.
In my opinion, when you’re first getting into budgeting, having up to 15 categories is a great starting place. If you find that’s not really working for you, you can then expand individual categories.
The easiest method is to start with general and broad groups. Then, you can just narrow it down some more as you get more budgeting experience.
What Categories Should I Include in a Budget?
Regardless if you choose short or long list budgets, both require the same general categories. We’ll go into the specifics of each in further detail, even so far as to classify them into essential and non-essential groups.
The key categories that most budget include are:
1. Income
There’s no doubt that you need to know exactly how much money you have coming in each month.
2. Housing
Whether you are renting or already own a home, housing is an essential category. After all, its typically your highest budget category.
3. Utilities
Like housing, utilities are a huge chunk of your monthly expenses and should be included in budgets.
4. Transportation
This category is essential for vehicle owners as well as individuals who rely on public transportation.
5. Kids
While kids still share the same house, utilities, etc. there are still alot of potential expenses that are unique to them as well and should be considered.
6. Food
As a necessity for survival, you can guarantee that your food will be one of your major budgeting categories.
7. Pets
Along with food, providing your pets with adequate care is your responsibility as a pet parent. You should also include their expenses in your budget, regardless if you own a fish or multiple furry friends.
8. Personal Care
You will need to include many facets of personal care in your budget, from personal hygiene to prescription medications.
9. Debt
The least favorite item you have to include in your budget is debt, even though it’s painful to look at.
10. Insurance
Whether you have auto insurance, home insurance, disability insurance, and/or life insurance, these costs should be included as well.
11. Entertainment
Every household has an assortment of entertainment items that can be included in this category. From streaming services to family vacations, this category is essential to consider.
12. Work
Chances are if you are gainfully employed you will likely have expenses associated with it.
13. Healthcare
If you live in the United States, healthcare is a category that will show up in your expenses.
14. Savings
Regardless of your financial situation, hopefully you are putting money away for the future and this money should be included in your budget.
15. Miscellaneous Expenses
This category is highly recommended for extra expenditures that don’t easily fit in elsewhere. The miscellaneous category is bound to differ from person to person. It can include taxes, bank fees, cancellation fees, and more.
How Much Do You Allot for Each Budget Category?
There are three main things to consider when deciding how much money to allocate to each budget category.
These include your previous spending history, your future goals, and what’s realistic for your lifestyle.
It’s important to note that there isn’t a specific formula to follow when deciding budget allotment. Instead, it’s important to prioritize your spending according to your priorities and your financial goals.
Previous Spending History
When establishing budget categories, you’ll need to look at how you spent your money in previous months. A good way to do this is to take a look through your past bank statements for the last 3 months.
When you are going through your past spending you are looking to see where your money is going.
A good starting point maybe to categorize as you go with a highlighter or just mark you discretionary spending or transactions that you don’t normally track to get a good idea of where your money is being spent outside your normal monthly bills.
By the end, you should have a good idea of what you can expect to spend month to month throughout the year.
Future Goals
Future financial goals plays a key role in putting your budget together as you need to know what you are working towards.
Do you want to retire early? Are you wanting to take your family on vacation? Do you need to put money away for the holidays or education?
Knowing where you want to end up, helps you plan the steps you need to take to get you there.
The Essential Budget Categories
Now that you know what to expect from creating your own budget, let’s explore the essentials you need to have.
1. Income
As mentioned, knowing your income is really the starting place for your budget. Without knowing this, you won’t know how much money you need to allocate (assign a job)
- Investment income
- Paychecks
- Known bonuses
- Earned interest
- Rental properties
- Side hustles
2. Housing
Housing is essential whether you’re renting or own your house. There are dozens of costs associated with having property, including:
- Household repairs & appliance replacement
- Property taxes
- Homeowners and renters insurance
- HOA dues
- Mortgages and rent
- Maintenance fees
- Real estate fees
- Lawn & garden care
3. Utilities
As another component of homeownership and renting, utilities are an extensive expense. The most common categories within utilities include:
- Natural gas
- Electricity
- Water
- Cable
- Trash
- Internet
- Cell phone bills
- Landline telephone bills
4. Transportation
Regardless of whether you own a car or use public transportation, transportation can be costly. As a car owner, you’re likely to incur more expenses because gas and vehicle maintenance are necessary. A few other transportation-related expenses include:
- Parking fees
- Registration and DMV fees
- Toll payments
- Public transportation passes
- Carpooling fees
- Maintenance & repairs
- Public transportation & toll road fees
- Gas
- Car Payments
5. Kids
If you have kids you can guarantee an assortment of costs associated with parenting one (or more). Some of the more specific budgets to consider for kids could include:
- School supplies
- School Lunches
- School pictures
- Yearbooks
- After school activities
- Teacher gifts
- Daycare or tuition
- Registration fees
- Summer camps
6. Food
Food (behind housing) is usually a sizable portion of any family’s budget.
A few of the food-related and non-food related expenses to add to your household budget categories include:
- Coffee
- Groceries
- Food accessories
- Cleaning supplies
7. Pets
If you have pet you can plan on an assortment of costs associated with parenting one (or more). Some of the more specific budgets to consider for pet ownership include:
- Grooming
- Pet accessories
- Pet food
- Veterinary costs
- Pet home products
8. Debt
It’s up to you to decide how you want to categorize certain types of debt. For example, if you own your own home a mortgage is a type of debt, but it’s also a housing expense.
However you decide to categorize expense, the important part is to account for them and less about where you account for them.
Some common types of debt:
- Credit cards
- Car payments
- Student loans
- Personal Loans
- Home Equity Lines of Credit
9. Personal Care
Personal care is a bit of a catch-all and there is some flexibility within this category, but here’s a good jumping off point of the kinds of expenses you would see in this category:
- Toiletries
- Clothing
- Shoes
- Personal hygiene products
- Makeup
- Hair products
- Hair cuts
- Exercise classes, subscriptions and Equipment
10. Insurance
Several different types of insurance could apply to your budget, including:
- Car insurance
- Life insurance
- Dental insurance
- Health insurance
11. Healthcare
Healthcare is another one of those categories that can encompass a good many things. Some common expenses within this category would be:
- Doctor’s visits
- Eye glasses, contacts, etc.
- Prescription medications
- Medical devices
- First aid items
- Co pays
- Premiums & deductibles
- Orthodontics
- Therapy
12. Work
- Parking
- Dry Cleaning
- Licensing and other professional fees
- Uniforms
13. Savings
The last essential category to consider for your budget categories list is savings. Your savings can include several items, such as:
- Retirement
- College
- Emergencies
- Homeownership
- Sinking funds
The Non-Essential Budget Categories
Non essential budget categories are the “wants” in your budget. They are the nice to haves.
These are the budget categories that if I had to trim my budget, I would start here first.
1. Entertainment & Fun Money
Just because you’re saving money doesn’t mean you have to get rid of every ounce of entertainment in your home.
It’s better to include some fun money in your budget as it makes sticking to your budget easier when you aren’t operating in a feeling of deprivation.
A few expenses you’d find in this category include:
- Electronics
- Subscription services (Netflix, Hulu, Disney +)
- Rentable entertainment (books, movies, and music)
- Hobby supplies
- Fun money
2. Travel
Travel is just like what it sounds like– traveling to places.
Some categories you’d find here are:
- Camping/cottage stays
- Staycations
- Local tourist attraction visits
- Summer vacations
- Spring Break
- Holiday trips (Thanksgiving, Christmas, etc.)
3. Gifts
I find that this category is one that often gets forgotten. While, gifts aren’t necessary they are something that crops up throughout the year.
Some specific categories for gifts include:
- Birthday gifts
- Christmas gifts
- Charitable donations
- Wedding gifts
- Baby shower gifts
4. Social Events
Everyone needs to be able to spend time with their friends and family. You could easily combine this with the fun money category, but I like listing it separately as it sometimes helps really fine tune your spending throughout the year.
Some of my top recommended categories for social events include:
- Bar and restaurant tabs
- Sporting events and concerts
- Party hosting
Simple Budgeting Categories Alternative
If that massive list is anxiety inducing, jump over to my post about the simple 6 budgeting categories you really need — and doesn’t make you want to run screaming into the night!
Comprehensive List of Budget Categories: Final Thoughts
With a comprehensive list of budget categories, you are more than prepared to begin managing your spending, helping to eliminate those unpleasant budget busting surprises.
