With the launch of the Blessed Budget Planner, I’ve had several questions about how I categorize my monthly expenses, so I thought I’d walk you through step-by-step, the line items in my budget. I’ve also placed an asterisk (*) next to all of the categories that are part of my cash envelope system, just so you know.
How I Categorize My Monthly Expenses (And You Can, Too!)
Of course, your budget will differ from mine based on your own expenses and the needs of your family, so while you can use mine as an example, make sure yours works for you!
Note: while you can create as many line items in your budget as you want, I highly recommend sticking to those that you absolutely need so that you don’t begin to feel overwhelmed when it comes to tracking your expenses.
These are the expenses that don’t change from month to month. You can find more about them HERE. While these might be different for you, I’d bet that you can pick out exactly which ones also apply to your own budget.
- Mortgage/Rent Payment
- Phone Bill
- Home Security
- Auto Insurance
- Water & Sewer Bill
Each and every one of those line items is billed for the same amount each month. We’ve been able to set them up on auto payment, so I know for certain they will come out at the same time each month as well.
Grocery* & Household
The grocery budget is one of the hardest for new budgeters to figure out. Why? Because it’s so easy to overspend.
In our case, as I’ve mentioned before, it’s easiest for us to split our total grocery fund for the month into smaller chunks (i.e. Weeks 1-4).
Additionally, we incorporate line items for Household, Eating Out, and Miscellaneous. These “line items” are not “savings funds” because we do not carry the money over from month to month. In fact, any extra money left over goes straight to helping us achieve our goal.
The household fund is for items including paper products (toilet paper, paper plates, paper towels, etc.), cleaning products, shampoo, conditioner, soap, and kitchen items such as bags, wrap, etc. Many people choose to include this in their grocery budget, but I want a clear division between what we eat and products that we could very easily (minus the toilet paper) go without if we’d already run out of money that month.
Note: we do not include personal items such as specialty hair products, makeup, or even shaving cream in this category. Those items come out of each individual person’s spending money.
A lot of people give up eating out when they are on a strict budget, but in our home, I just knew that we couldn’t let go of it completely. Instead, we allot ourselves a small amount of money (between $50 and $100) each month so that we can go out as a family and enjoy the foods and atmospheres we love.
Ultimately, whether you choose to incorporate this category into your budget is completely up to you. If you do, make sure you take into consideration where you eat and the general cost involved so that you don’t budget too little.
Ahh…. the miscellaneous category. This is one I have trouble explaining but is essentially the buffer in our budget. Anything that doesn’t fit into another category gets tossed into miscellaneous.
This month, for example, our miscellaneous category caught parking fees for medical appointments Justin had to go to, a bike lock, and some postage for an item I sent to my mom. Those expenses could have been categorized differently but having the miscellaneous fund available normally means that I only remember it when another category might already have been used. (For example, our medical fund is being used regularly right now, so it was nice that it didn’t have to accommodate parking as well.)
If you do choose to have a miscellaneous fund, I highly recommend looking back over your last few months’ worth of expenses and determining what a reasonable amount might be. THEN, it’s important that you decide what, if anything, that fund will be used for.
I love my savings funds and if you want a little closer insight into why they work so well for us, feel free to check out this post HERE.
Ultimately, I use a savings fund for anything that doesn’t stay the same from month to month or needs to be carried over. You have to make the decision based on your own financial situation as to which funds meet your needs. While you can never have too many funds – create as many as you like – tracking them all can take time and energy, so I recommend sticking to the minimum amount you can get away with.
For us, it’s the following.
At the time of writing this, we have three cars that all require new tabs each September. For us, in combination with back-to-school expenses, it really isn’t feasible to pay $180 out of our September budget. Because I’m aware of that, we put aside $15 each month toward those fees. Come September when the bills arrive, we have the money and are ready to pay for those tabs.
While our electricity payment stays the same each and every month, our gas bill changes drastically throughout the year. (We heat and cook using gas, so that’s no surprise). Despite those changes, I like to keep the monthly budget as close to the same each and every month, so we add $120 each month to that fund.
Some months (in the summer), our gas bill is much lower, but we collect the extra money in that fund for the months (in the winter) when we owe upwards of $200. It doesn’t always work out perfectly, but it keeps us from having to counter huge fluctuations within our budget.
I’m not sure how it works in your area, but in ours, garbage collection is paid for on a quarterly basis. That means that we will owe right around $99 each quarter and while I could be “surprised” by that expense every third month, I’ve chosen to incorporate it as part of our monthly budget by “paying our fund” $33 each month.
Once again, I do it for consistency and so that we never have to wonder where the money will come from when our garbage bill is due.
In the same way as garbage collection, we have a pest prevention company come out every three months to spray our home for carpenter ants, spiders, and take care of the wasp nests in the summertime.
It’s worth it to us, but it costs about $90 per quarter, so I put aside a little over $30 per month to cover that cost when it comes up.
Honestly, if I didn’t plan ahead for it, we’d likely have at least one or two months out of the year that I’d rationalize not having them come. We’d regret it later when we had an influx of bugs, but in the spirit of saving (and paying off debt with) the most money possible, it would be tempting to simply put it off.
Ideally, if I know we are going to take a vacation, I’m simply going to take the total cost of said vacation and divide it by the number of months we have before it takes place. It doesn’t always work out perfectly, but when in doubt, it’s better to have the money ready ahead of time than to be scrambling to figure out where it’s going to come from.
Game Night & Generosity*
One of my favorite categories in our budget, and one I talk about frequently, is our game night/generosity fund. We love to have people in to play games, so this fund (that I put a little money into each month) allows us to do so and sometimes provide food and drink items to go along with those gatherings.
It’s not much, but we love to be able to be generous and this is one way we do so without breaking our budget.
It always amazes me how many items categorize into home improvement. For us, anything from major home improvement plans, such as replacing a deck or repainting the house, to minor things such as light bulbs and batteries from for the smoke alarms fit into this category.
The nice thing about putting money in this fund monthly is that we rarely find ourselves with an expense we can’t cover. Sure, we might have to wait for a bigger project, but there’s normally enough money in the fund to get us started.
There’s nothing like a birthday to throw you us off our budget, which is why I’ve mandated the birthday fund. We don’t put a lot of money into it, because we don’t spend a lot of money on birthdays, but the nice thing is, there’s normally enough for a fun birthday dinner, a present, and even a movie rental if we choose to go that direction.
For us, keeping it simple works, but if you need more money than that, then by all means, make sure you budget for it.
Note: an easy way to do this is to decide how much money you need for each person’s birthday and then divide that number by the 12 months of the year. That’s the amount you need to put aside each month to make it all work!
School Year Expenses
I wrote an entire post about school year expenses (find it HERE), but I also want to mention those other pesky expenses that come up that aren’t necessarily school related. For example, if your children are involved in extracurricular activities during school breaks or summertime, this is the perfect category to begin planning for them.
This will be specific to your own family, but if I know my daughters are going to go to summer camp this summer and it’s going to cost me $400 each, then I know that I need to plan to save $800 split over how every many months it is until that payment is due.
Give yourself some time to figure out what all of those expenses might be, and when you do, readjust that budget so it reflects them.
Note: it might also be helpful to write down which expenses you are saving for within that category. Right now, I know that our School Year Fund is meant to catch back to school expenses, class party expenses, teacher gifts, and two extracurricular activities per year. Knowing that helps me save only what I need.
Our medical fund has been a huge lifesaver this year (read the reasons why HERE), and I definitely recommend putting one together for yourself if you haven’t already. We use our medical fund to cover anything including copays, coinsurance, prescriptions, and even over the counter medications when necessary.
How much you need definitely depends on the current state of your health, insurance, and deductibles, but I highly recommend splitting your highest deductible over 12 months and contributing a similar amount.
For us, having personal spending has made a huge difference in our ability to stick with the budget. While I track how much money is leftover in each of our spending categories, I don’t necessarily track what the money is spent on.
Things that are included as part of personal spending, that could otherwise be included elsewhere are:
- Shaving cream and any specialty soap or shampoos
- Personal grooming (i.e. haircuts, etc.)
- Alcoholic beverages and sodas
- Meals/coffee out that don’t include the entire family
- Clothing, shoes, and accessories
We’ve added the amount of money to each person’s “spending fund” so all of these items will be covered. Ultimately, it’s up to that person to decide how to best spend their money or to simply go without.
This savings fund is used for all things cats (in our home). Think litter, cat food, and grooming. It does not cover pet emergency vet visits, which we typically pull from our emergency fund or personal spending, depending on the incident. Your family might do it differently, though, so make sure to make it work for you!
You can find my post on this very topic HERE.
The final category in our budget is debt. Of course, we hope to be debt free someday, but right now I track the name of the debt, how much our minimum payment is supposed to be, and then how much we actually pay on that debt each month.
This process keeps us accountable and allows me to see, at a glance, how much we’ve paid off and how many debts we are still working on getting rid of.
I do use my debt snowball worksheet to track our payoff date and how much interest we are accruing on each debt.
Your Budget = Your Choice
Which categories you choose to incorporate into your own budget is completely your own decision. In our case, we chose categories and line items that directly correlated to our family lifestyle. If you need more or less, then by all means, make sure to include what works for you!
I’ve said it before and I’ll say it again: there’s no “one-size-fits-all” method to getting your finances in order.
What categories do you choose to incorporate? Leave me a comment below and let me know!
P.S. If you need a helpful guide to get you and your budget on the right track, check out this one. Prefer to have it delivered right to you? Then the Blessed Budget Planner has your name written all over it! Find it HERE.