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.
If I’m honest, I actually love the granularity of having lots of budget categories. In fact, I’ve shared 90 personal budget category suggestions that I leverage in my own budget. Nonetheless, I understand that it can be confusing to some people.
Too many budget categories can overcomplicate things to the point that you don’t even want to budget! So, I wanted to provide nine simple budget categories that you can use to manage your money to keep it organized and to help you separate your funds.
Let’s jump in.
Simple Budgeting Categories to Manage your Money
Here are nine simple budget categories that you can use to manage your money. You can also grab a copy of my free monthly budget template that outlines each of these categories.
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.
- Charitable giving
Whether you own a home or rent, you should have a way of allocating money toward those expenses. With this particular category, you can plan for 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:
- Homeowners/renters insurance
- Home repairs/maintenance
- HOA fees
- Furniture & decor
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.
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.
- Dining out
The amount that you’ll spend on transportation 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 everything related to transportation, owning a vehicle, using public transportation or car sharing services.
- Automobile payment
- Public transportation fees
- Car sharing
- Toll fees
- Car repairs/maintenance
- Automobile taxes
- Registrations fees
- Automobile insurance
The fifth category is what I like to call ‘Personal’. This is really a broad category to cover personal care expenses like entertainment, hobbies, shopping, and more.
Some expenses that would fall under this category include:
- Personal grooming services
- Personal care items
- Date night
- Education expenses
- Pet care
6. Utilities/Living Expenses
The sixth category is utilities slash living expenses. This includes all of the 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.
- Cable/subscription services
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
- Medical insurance
8. Debt repayment
The eighth category is debt repayments. Of course, the type of debt that you have will vary. However, having a budget category for debt can allow you to designate money for paying off debt. Some common debt can include:
- Credit card bills
- Student loans
- Personal loans
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.
- Emergency fund
- Sinking funds
- Travel fund
- Short term savings
- Long term savings
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
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 your 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
- Eating out
- Nail and hair appointments
- 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 your manage your finances.
3. Budgeting apps
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
In fact, I actually recommend having at least eight different bank accounts. Many of them mirror the simple budget categories that we just established.
As you can see, budgeting doesn’t have to be complicated. You can leverage something as simple as these nine budget categories You can also get more detailed and include more budget categories as well.
If you’re interested and seeing what a very detailed budget looks like, consider these 90+ budget categories as well.
Continue reading >> 90+ Budget Categories for the Ultimate Budget