black couple budgeting

9 Simple Budget Categories To Easily Manage your Money

When it comes to managing money, simple is often better. This is especially true when it comes to budgeting. Having just a few, simple budget categories can make budgeting way less overwhelming, particularly for those who are new to budgeting.

Too many budget categories can overcomplicate things to the point that you don’t even want to budget! And, although I’ve shared my comprehensive list of budget categories, I understand that it can be a bit overwhelming. The important thing is finding what works for you.

Your budget should help you move toward your financial goals, not be a barrier to reaching them.

So in this post, I’ll be sharing nine simple budget categories that you can use to manage your money to keep it organized and to help you separate your funds. I’ll also share the simple steps for creating a budget and some tools that you can use to stick to your budget once you’ve made it.

Of course, we have tons of resources that will help you with your budget. If you want to learn more about creating a budget, I recommend also reading our ultimate guide for creating a family budget.

Let’s jump in.

Simple Budget Categories List to Manage Your Money

No matter what budgeting method you use, there are nine main categories that all of your expenses will fall under. You can use these different categories to create your monthly budget. Essentially, all of your spending will fall into these categories.

Once you’ve read through this post, a good idea is to go through all of your recent expenses and see which of these categories they fall under. This is a great way to get started with your budget. You can also grab a copy of my free monthly budget template that outlines each of these personal budget categories.

Here are the basic budget categories that you can use to start your budget.

1. Giving

If you are a generous person, having a budget category where you can actually allocate money towards it is perfect. Very few budgets will include this as a category; however, I think it’s important. Even in giving, we should be good stewards by planning.

This category can be used to set aside funds toward things like giving tithes at your church or for charitable giving. You can even use this category to put money aside for gift-giving. 

  • Tithes
  • Charitable giving
  • Gifts

I personally make this the first thing in my budget; however, having money set aside for it is what’s most important.

2. Housing

Whether you own a home or rent, you should have a way of allocating money toward housing expenses. With this particular category, you can plan for housing costs associated with renting or owning a home. 

Not that the housing category does not include living expenses. Those will be covered in a separate category.

You’ll use this portion of your budget to  allocate money for things like:

  • Mortgage payment/rent payment
  • Homeowners/renters insurance 
  • Property taxes  
  • Home repairs/maintenance
  • HOA fees
  • Furniture & decor

3. Food

The third budget category is food. Although food is pretty simple, it can take up a large portion of your budget.

If you have a large family or tend to prefer more high-end grocery stores, then food expenses can get expensive. Make a budget category to plan for it ahead of time.

Here’s what you need to plan for:

  • Groceries
  • Dining out

A great idea to help cut down on this category is to meal plan and meal prep. Also, consider finding ways to save money on groceries.

You don’t have to sacrifice the quality of your food to save money in your budget using a few helpful tips.

4. Transportation

The amount that you’ll spend on transportation costs depends on where you live and if you own a vehicle. Even if you leverage public transportation or car sharing, having money set aside for those costs is important.

This category is meant to cover things like your automobile payment or gasoline for your car. You can also use it to put money aside for things like a carwash or even car repairs, and even taxes on your vehicle.

So this is all of your transportation expenses—including owning a vehicle, using public transportation, or car-sharing services. 

  • Car payments/car loan
  • Fuel
  • Public transportation fees
  • Car sharing
  • Toll fees
  • Carwash
  • Car repairs/maintenance
  • Automobile taxes
  • Registrations fees
  • Car insurance

I suggest checking out our article on ways that you can save on transportation expenses to help lower costs in this category.

5. Personal Expenses

The fifth category is what I like to call ‘Personal’. This is really a broad category for discretionary spending that’ll cover personal care expenses like entertainment, hobbies, shopping, and more. 

Some expenses that would fall under this category include: 

It’s important that you budget for things like entertainment and even shopping. Having a plan for your “fun money” is critical if you want to stay within your budget. 

6. Utilities/Household Expenses

The sixth category is utilities slash living expenses. This includes regular expenses like bills that you have to pay each month to keep your household going. 

This is where you will cover things like your water bill, your light bill, electricity, gas bill, and security. It will also cover things like your subscription, internet, phone, and cable.

  • Water
  • Electricity
  • Gas
  • Security
  • Cable/subscription services
  • Internet
  • Cell phone bill

The expenses within this category will fluctuate from month to month. I suggest reading our article on ways to save on utilities if you want suggestions on how to account for these fluctuations.

7. Medical

The seventh category is medical. This is meant to set money aside for things like medical bills and medications. 

If you have the opportunity to, you can also use an HSA account or an FSA account to cover qualified medical expenses. But, if you don’t have an HSA or an FSA account, you can create a budget line item for medical expenses and put money towards those expenses. 

  • Medical bills
  • Health insurance
  • Life insurance
  • Copays
  • Premiums
  • Medication

​Medical expenses are often a driver to families getting into debt and even experiencing bankruptcy. So, it’s probably one of the most important budget categories to have so that you can save for these expenses. 

8. Debt repayment

The eighth category is debt repayments. Of course, the type of debt payments that you have will vary. However, having a budget category for debt can allow you to designate money for paying off debt. Some common debts can include:

  • Credit cards 
  • Student loans 
  • Personal loans

It’s important to make paying off debt a part of your budget. Allocating any extra money toward debt will help you pay if off faster and free up room in your budget for other things that matter most to you. 

9. Saving

The last category is for saving. It’s important to have funds set aside for emergencies and other longer-term goals. This category is for your savings goals and sinking funds. The money in this category would be transferred to a savings account.

  • Emergency fund
  • Sinking funds
  • Christmas
  • Travel fund
  • Short term savings
  • Long term savings
  • Retirement account

Now that you have the simple budget categories that you can use for your personal budget, it’s time to actually create your budget!

How to create a simple budget

The whole purpose of having a budget is to help you reach your financial goals. So no matter what your financial situation is, a budget is simply a spending plan that will ensure that your putting your money in the right places.

There are many ways to create a budget. But, ultimately, here are the basic steps for creating a budget that will allow you to manage your spending habits and stay within your overall financial plan.

1. List your income

Your income will be the topmost line on your budget.

This includes everything from your 9 to 5 job and any side hustle that you may have.

First, list the name of these income sources in one column and the expected amounts in the column beside it.

Leave space for another column called ‘Actuals’. You’ll put the actual amount that you receive from each income source in this column.

Next, add a column titled ‘Difference.’ This column is to calculate the difference between what you expected to receive and what you actually earned in income.

Lastly, total up your expected income column. This is the amount of money that you have to budget with for the pay period.

2. List your expenses

You’ll want to list your expenses right underneath the income portion of your budget.

I’ve made this part easy by creating a list of over 90+ common household expenses. You don’t have to get this granular.

Instead, you can choose to budget in categories or percentages. For the sake of this example, I’ll use general categories.

You’ll go through the same exercise of listing out your expected and actual amounts and differences. Remember, the actual amount will be added when the expense is incurred.

If you’re not sure what to expect, take an average of the last three months for each category or expense.

3. Compare expenses to your total income

Your next step is to compare your net income— income after taxes, healthcare, and other expenses taken out of your paycheck— to the total expenses that you expect to incur that month or pay period.

For many people, the expenses will be greater than their income. This is an indication that you’re spending above your means and need to find ways to cut your monthly expenses.

However, if you find that your income is greater than your expenses, you should either put that money toward paying off debt or saving more.

Some common expenses that can be reduced or eliminated
  • Cable
  • Eating out
  • Nail and hair appointments 
  • Groceries
  • Gym membership
  • Subscription services

The goal is to get your total monthly expenses well below your monthly income. The more that you’re able to reduce or eliminate, the better. That is the definition of living beneath your means.

4. Document each purchase or payment that you make

Now that you’ve established your budget, you must keep track of your expenses in the actual column.

Each time you make a payment or purchase, document down how much you’ve spent in your actual column.

Tools to help you stick to your budget

Creating these budget categories is just the first step. The next step is putting tools and systems in place to stick to your budget.

1. Budget Spreadsheet

A budget spreadsheet is the number one way that my husband and I are able to manage our finances.

The great thing about having a budget spreadsheet to manage your money is that you can access it from anywhere! You can budget from your computer, phone, or even a tablet and it will all sync together. This is especially useful when you are working with your spouse to manage money. 

You don’t have to worry about creating your budget spreadsheet from scratch, though. I’ve actually created one that’s available for you to use that matches these simple budget categories.

The cool thing about this budgeting spreadsheet is that you can see where the majority of your spending is. This is important because you can make adjustments as necessary to get your spending and budget back under control.

2. Budget printables

Not everyone wants to manage their money digitally. I’ll admit that there is some satisfaction that comes from writing things down. So if you’re one of those people who like to write things out, budget printables are the right tool for you.

Much like the budget spreadsheet, printable budgets help you plan out your spending and track your expenses throughout the month. The only difference is you’re grabbing pen and paper to do so.

If you’re new to budget, I definitely recommend using printables in a budget binder to get in the habit of sitting down and looking over your finances. 

You can make budgeting with printables fun by using markers and stickers to highlight big wins, like paying off debt or meeting your savings goals! Having fun with it will make it something that you want to do and less of a chore.

If you’re the pen-and-paper kind of budgeter, I’ve created a whole suite of budgeting printables that you can use to help you manage your finances.

3. Budgeting app

If you’d like to budget with an app, I recommend using Qube money. Qube Money is a new banking app that allows you to use a digital cash envelope system to manage your money. You can create “qubes” based on these budget categories and have funds automatically transferred from your bank or direct deposit.

You can learn how to use Qube in this video.

4. Corresponding bank accounts

Remember, you can also mirror this and how you manage your bank accounts. So perhaps you have a bank account—either a checking account or a savings account—for each of these budget categories

In fact, I actually recommend having at least eight different bank accounts. Many of them mirror the simple budget categories that we just established.

5. Cash envelopes

Another way to stay within your budget is to leverage cash envelopes. Although a lot of people don’t like to carry cash, it’s still a good way to make sure that you don’t over your budget and that you have enough money at the end of the month.

You can match your cash envelopes up with the budget categories in the post or use as many as your need.

Are you ready to budget?

Ultimately, a budget is a tool to help you reach your overall financial goals and to stick to your financial plan. So it doesn’t have to be complicated. You can leverage something as simple as these nine budget categories to manage your finances.

​Hopefully, this article provided some insight into budgeting. I encourage you to check out our other articles on budgeting and money management to learn more. 

Continue reading >> 90+ Budget Categories for the Ultimate Budget

Fo Alexander

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