While there is no “one size fits all” way to budget, I’ve always found it interesting to read about how others budget. This has helped me choose the categories that work best for our own situation. Here are the main categories I currently use for our take home pay (after taxes, health insurance, 401k contributions, etc.):
Giving
Groceries/Household Necessities
Monthly Bills
Eating Out/Fun/Gifts
Cat
Misc
Sarah
Andrew
I use an app called GoodBudget that allows me to allocate money to virtual envelopes and then track spending in each category. Most of the categories listed are pretty self explanatory, but you may be wondering about “Sarah” and “Andrew”. When my husband Andrew and I were using a cash envelope system years ago, we decided it could be beneficial to add these budget categories. We originally called the envelopes “Blow Dough” since each of us was free to “blow” the money however we decided. This significantly cut down on spending disagreements. Whether you’re single or in a relationship, setting aside a little fun money could actually help you stick to your budget.
I also have a few special savings accounts that we add money to regularly:
Short Term Savings - This is for future vacations, large medical expenses, etc.
Bills Fund - HOA, property taxes, home/car insurance, life insurance, etc. - I simply add up the total due for the year and divide by 12. That’s the amount that’s automatically transferred to the bills fund each month so we’re always ready to pay these bills when they come due. This amount has to be adjusted periodically as annual amounts increase.
Car Fund - This is for car repairs as well as savings for newer cars when it’s time to replace the ones we currently own.
House Stuff - I’m obviously very formal with the category names. We purchased a new home a little over a year ago and it felt like we were going to use up our short term savings if we didn’t set aside additional funds for “house stuff”. My husband is very handy with home improvement projects so the list of possibilities is pretty much endless. Having a special account for money we’re spending on the house helps keep the spending in check.
Whether you use a system similar to this, or something completely different, the most important thing is to find and implement a plan that works for you.
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