The 9 Budget Categories (and Why You Should Have Them)

The 9 Budget Categories (and Why You Should Have Them)

Budgets are a great way to take control of your finances.

If you follow your budget properly, you’ll be less likely to go  into debt, unless you blatantly overspend (and defeat the budget’s original purpose.) With a budget, you’ll know how much you’re saving for your children’s college education and how much you can spend on groceries each month.

If you’re ready to rescue your financial situation, here are nine budget categories and why you should have them.


Your income is different from your gross pay, and you should have a budget column for it. Income is whatever you make after taxes and 401(k) withdrawals, so make sure you’re budgeting with money you can actually spend per month.

Mortgage or Rent

Unless you’ve already paid off a home, you’ll have mortgage or rent payments every month. Set aside the proper amount for this expense, as well as extra fees, such as property taxes.


Besides your rent or mortgage, you’ll have to pay for water, heat, gas, electric, and probably trash and sewer, depending on where you live. Some apartments or home rentals cover these costs, but estimate the cost of each month’s utility bill based on past records. Always budget a little more than you think you’ll need to cover everything.


You can start a separate fund for home items, such as your refrigerator or dishwasher, if you’d rather have a separate category for when they break down. That way, when you need appliance repair Portland, you don’t have to take from the broken-ankle fund to cover it. Your emergency fund decisions are up to you, so do whatever makes you most comfortable.

Your savings fund will cover a range of categories, and you may want to split this category into several smaller ones. Are you saving up for your children’s education? How much do you want to save for retirement? Set aside an income percentage to go into each savings category, and make sure you’re able to set aside that much each month.

Health Care

Health insurance is an important part of any family’s budgeting needs, even when everyone is healthy. Strep throat or chicken pox can suddenly flare up, and bones can be broken on school hiking trips. Be ready for your family’s health care expenses by paying for health insurance. If you’re willing to risk it, go with a low payment and a high deductible, but make sure you’re ready in case of disaster.


Many Americans struggle with debt. If your family is still paying off student or consumer debt, you’ll need a big chunk of your budget category dedicated to these payments. If you can pay more than the necessary amount, you won’t be charged interest on the added payment. Try to include more in this category than is necessary to complete your payments, and you’ll be able to pay off debts sooner.

Personal Items

In your budget, you’ll need space to cover any personal items for each family member, such as clothes, beauty products, and entertainment costs. You can give each member (even the adults) a set amount, or allowance, for these needs.


Of course you need to buy food for your family, and groceries and eating out should get its own category. You can split up eating out and groceries or keep them together, but you’ll want to limit your spending in each category. If you’re feeling strapped for grocery cash, try buying in bulk to ease the tension.

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