The Only 4 Budget Categories You Need

Managing your finances can be overwhelming. Simplifying your budget is the key, to success. Many people get caught up in budget categories, spreadsheets and apps…

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Managing your finances can be overwhelming. Simplifying your budget is the key, to success. Many people get caught up in budget categories, spreadsheets and apps that promise to make financial planning easier. However it doesn’t have to be complicated. In this blog post we’ll explore the only four budget categories you need; Housing, Utilities, Food and Transportation. By focusing on these categories you can take control of your finances and work towards achieving your financial goals.

The Only 4 Budget Categories You Need

1. Housing

For individuals and families housing is the largest portion of their budget. Whether you rent or own a home it’s crucial to allocate a portion of your income, for housing expenses. Here’s how you can effectively manage this category;

  • Ideally it is recommended that you limit your housing expenses to no, than 30% of your income. This will ensure that you have room in your budget to cover essential categories.

2. Utilities

  • Electricity and Gas

These expenses cover heating, cooling, lighting and powering your appliances. To keep costs in check it’s worth considering energy appliances and adopting practices that can help reduce your utility bills.

  • Water and Sewer

Don’t forget about recurring water and sewer bills. Implementing water saving measures in your home can lead to savings in this area.

  • Cable

In todays age, internet and cable services are often considered indispensable. However exploring plans or even opting for streaming services can help costs.

  • Trash and Recycling

It’s important not to overlook waste removal costs. Make sure to include a budget for trash collection and recycling services to your area.

3. Food

This includes grocery shopping, going out to eat at restaurants or ordering takeout. It can be quite expensive. It’s best to reserve dining out for occasions or limit it to a portion of your budget.

  • Coffee and Snacks

Those little daily expenses, like coffee or snacks can really add up over time. One way to save money is by making your coffee at home and bringing your snacks.

  • Special Occasions

To avoid overspending make sure to plan for special occasions like birthdays and holidays.

4. Transportation

Another category in your budget is transportation and how you choose to get around can have an impact on your finances.

  • Vehicle Expenses

If you own a car remember to budget for expenses such as fuel, maintenance, insurance and registration fees. To cut down on costs consider carpooling or using transportation.

  • Maintenance and repairs

setting aside funds, for these purposes is crucial as it helps prevent burdens. Regularly maintaining your car will save you from repairs down the line.

  • Public Transportation

If you rely on transportation make sure you include the cost of passes or tickets in your budget. Also check if there are any discounts or subsidies, in your area.

  • Commuting

When calculating your commute costs don’t forget about parking fees and tolls. If possible, try carpooling or telecommuting as ways to reduce these expenses.
Customize it to suit your situation and objectives.

 

The best I have found to stay within budget is using cash. Using cash envelopes, I would put the amount that I budgeted for in each envelope. When it’s time to spend from that I envelope, I only take that one envelope with me. This keeps me from using cash from the other envelopes and forces me to stay within my budget for that category. Amazon has an entire budget binder with cash envelopes so that you can track your spending in each category.

 

Check out this video below if you want to see my budget categories and how much I spent in a month living in Atlanta on a budget. Curious about why I started budgeting? Click here to read why.

 

This post may contain affiliate links. If you purchase a product or service using the links that I provide I may receive a small commission. There is no additional charge to you.

 

Related: How I Managed My Money in my 30’s