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Wondering what categories you should include in your budget?

When you’re making a budget, it’s important to know where you’re spending your money. If you’re forgetting some of your expenses, your budget won’t be as accurate- and not as helpful as it could be. 

This can be discouraging because you’ll end up spending more than you thought you would, based on the budget you made. 

By including all of your expenses in the first place, your budget will be way more realistic. You’ll get a much clearer picture of what your spending really looks like! 

Since there are so many different spending categories, and so many expenses that are easy to forget- 

Here is a list of budget categories to get you started on your budget:

Income

Full-time job

Part-time job(s)

Seasonal job(s)

Side hustle(s)

Bonuses

Income tax refunds

Investment income, like dividends

Rental income

Re-selling items like clothes or furniture

Housing

Rent or mortgage payment

Property taxes

Household repairs

Condo or housing association fees

Utilities

Electricity

Water

Hot water

Heat

Air conditioning

Garbage or recycling collection

Internet

Transportation

Car payment

Fuel

Parking

Registration

Maintenance, ie. oil changes

Repairs

Inspections

Bus fares

Train fares

Taxi fares

Food

Groceries

Dining Out

Coffee

Insurance

Rental or home insurance

Health insurance

Dental insurance

Life insurance

Pet insurance

Car insurance

Disability insurance

Entertainment

Movie or TV streaming service

Music streaming service

Other paid apps 

Cable TV

Theatres

Concerts

Sports games

Video games

Alcohol/pubs/bars

Vacations

Personal Care

Hair services

Nail services

Cosmetics

Spa services, ie. brow waxing or facials

Massage therapy

Education

Tuition

Textbooks

School supplies

Child Care

Daycare

Babysitters

Health/medical

Medications

Medical devices

Dental visits

Supplements

Vision care

Paramedical practitioners, ie. physiotherapists, acupuncture, chiropractors

Pets

Pet food

Pet insurance

Other pet supplies, ie. litter, food bowls, treats

Vet visits/checkups

Gifts

Birthdays

Holidays

Anniversaries

Donations

Shopping

Clothes

Shoes

Furniture

Home appliances

Home decor

Plants

Cleaning supplies

Online shopping

Miscellaneous

Other purchases

Extra money in the budget

Annual credit card fees

Bank account fees

Savings

Emergency fund for unexpected expenses, like losing your job

Sinking funds for planned purchases like a down payment on a home, vacations, birthdays, annual subscriptions, etc.

Retirement savings

Other investments

Debt

Credit cards

Lines of credit

Personal loans

Student loans

Note: some of these expenses don’t happen on a monthly basis- they may only come up once or twice a year (ie. gym memberships and anniversaries). I recommend making a separate list of these occasional expenses and saving up for them in advance!

What is the best budgeting method?

The budgeting method I recommend is zero-based budgeting. 

With zero-based budgeting, your income minus your expenses equals zero. That means you are allocating all of your money towards something- and every last dollar is working towards your goals. 

You will also need to decide how often you would like to budget- every month or with every paycheck. 

The choice is yours, but if you are struggling with sticking to a monthly budget, you should give paycheck budgeting a try!

With paycheck budgeting, you budget for every paycheck instead of just once a month. You get to make a plan for every dollar of your pay, and it can be easier to predict your expenses for the next two weeks than for the next month. 

You can check out our guide on budgeting by paycheck here. 

What percentage of your income should go to each category?

Once you know what to include in your budget, the next question you probably have is how much you should spend in each category.

It’s impossible to say exactly how much you should spend in each category, because this can vary from person to person.

For example, two people can make the same amount of money, but one could have $50,000 in debt to pay off, and the other has no debt at all. 

One person could own a home and a car, and the other could be splitting their rent with a roommate while walking to work everyday. 

Each of these people may have the same income, but their budget percentages will be very different- and that’s okay!

Instead, it’s helpful to look at a rough guideline of how much to spend in each category, so you can see where your budget could use some changes. 

For example, if you notice that you’re spending 75% of your income on housing- it’s probably time for you to re-evaluate your housing costs. With only 25% of your income left to cover all of your other expenses, it’s not an ideal situation for you. 

Having your housing costs around 25% is much more manageable. 

Here are some rough guidelines you can follow for budget percentages:

Housing 25%

Utilities 5-10%

Transportation 10%

Food 10-15%

Insurance 10%

Entertainment 5-10%

Personal Care 5-10%

Health/Medical 5-10%

Shopping 5-10%

Miscellaneous 5-10%

Savings 10-15%

Other categories, like debt, child care, or tuition, can be added in depending on if these expenses apply to you. 

You can always remove categories that you don’t use, or just don’t use often- for example, if you’re working on paying off your debt, you might not be including shopping or entertainment in your budget (until you’re debt-free).

Happy Budgeting!