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February 8, 2019 · Leave a Comment

How To Determine Your Budget Categories

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Budget· Budget Tips· Printable· Saving

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When you start budgeting, it can seem so daunting.  At least it was for us.  We knew we wanted to get out of debt, and learning how to efficiently budget our money was made a little easier since our income and bills were pretty straight forward.  For us, it was the “other” expenses that were harder to sort out.  Those small expense leaks in our budget.  There always seemed to be categories that I forgot about month to month, and then the random category expenses that weren’t consistent each month.  It was exhausting!  How exactly could we determine our budget categories down to the penny?

How To Determine Budget Categories

When we started to focus on getting these smaller expenses under control, I did a lot of research on how much we needed to budget for each category.  What I found was a lot of answers out there on what percentage of our budget should go to specific categories.  This was exactly what I was looking for!  Something that would tell me how much to spend for certain categories, down to the penny!  In order to get a good look to see if our budget met these specific percentages, I needed to look over our spending.  So I did a deep dive into our bank statements and receipts.

What I found was that our budget didn’t meet the percentages so widely recommended.  It just added to our already high level of confusion and frustration.

For example, our car expenses were much higher than the percentages, but we live in a rural area and need a car to get anywhere.  Our rent at the time was within the percentage recommendation, but it was drowning us because the rental market in our area spiked with the influx of Marcellus Shale workers.  We had minimal savings at the time… and our budget was already stretched so thin you could forget about even setting anything aside consistently in our savings accounts.

It was time to take a step back, and look back over bank statements and receipts again.  Time to find out what our statements said we spent our money on.

What I found, among many things, was that most of our health expenses at the time were dealt with through Hubs’ employer.  We only had minimal contributions from his check {so I personally didn’t include it}, and then very minimal expenses once we hit our deductible, which at the time was $400 for the year for the family.

All of our insurance costs lumped into our one monthly bill weren’t even close to the minimum percentage, and we were very happy with our coverage.

Our food was exceptionally high, even based on percentages.  Since I couldn’t change medical costs very much, food was something we could work on.  I started monthly meal planning, shopping sales, and even using coupons to help get our grocery bill down.

But there was something else that we needed to do.  We needed to sit down, takes some time, and figure out what our spending priorities are, and from there, we could figure out our budgeting categories.

 

How To Determine Your Budget Categories When You’re Just Starting

Write down where you think you’re spending your money.

For us, I know we spend on groceries, household {yes, it’s a separate category for us because I don’t want household expenses to be a huge chunk of our grocery budget for the week}, fuel, and medical costs like copays and out of pocket portions.

But what you may be forgetting are the irregular categories.  What about pet grooming, hair care, new shoes for your kids and the occasional school fundraiser?

Look at your past bank statements.

Yeah, I said it.  But it really is critical to see where your spending priority.  When I did this with our 2018 expenses, I found out that we spent nearly $3,000 on medical costs last year.  We spent nearly $1000 on repairs and maintenance for our car.  And then there’s clothing.  We spent money on clothing {aside from our clothing cash envelope} and I some of it completely forgot about it.  How, I don’t know, because my kids have been growing out of shoe sizes so fast!

Make a realistic plan for moving forward.

Are there categories you can cut out?  Are some categories a complete surprise?  Did you blow your estimate on some categories out of the water?  What were some categories you forgot about., or categories you thought you were spending money on, but really weren’t?

Whatever the case, go through each category and plan what you will do with each.

What categories will you continue to use your debit card for?  Are there any categories you’ll want to take out cash for?  Will you have them in a savings account?  I personally use all three, depending on the category.

 

Point is, you just need to have a realistic idea of what your spending habits have been, what you want your spending priorities to be, and how you plan to stick to those priorities.

 

To help you get started, I created a printable list of budgeting categories that you can fill in.  It’s available for free in my resource library, which you can sign up for here.

Please keep in mind, this is by no means an exhaustive list of all the possible categories you would need.  It’s simply a starting point.  There are some blank spaces at bottom so that you can fill in your own if I happened to leave some out.

How To Determine Budget Categories

Tailor this printable for how you’ll use it.  I filled in some of our expenses over the course of 2018, but you can fill it in monthly if you choose.  If you don’t need a category, use some white-out and write in a category you do need.

The takeaway I want you to see is that budgeting by someone else’s generic standard won’t always accurately reflect your own situation.  By analyzing your own spending habits and priortites, you will have a much easier time determining your own budget categories.

How To Determine Budget Categories

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makingcentsmatter

makingcentsmatter
Only you can determine what your financial goals a Only you can determine what your financial goals are. If that means you're adding money to your savings account, or contributing to your retirement, while you are paying off debt, then so be it!⁠
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Do what looks right for you and your personal finances.⁠
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The trick to meal planning is to make it predictab The trick to meal planning is to make it predictable. But predictable doesn't mean the same thing week to week. You could have a chicken meal, a soup meal, a pasta meal, a leftovers meal, a family favorite meal, and so on.⁠
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We always try to go with themed days, but some weeks are so hectic the theme is literally "fast". Thankfully that hasn't been the case lately.⁠
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I can only hear about my extended warranty I never I can only hear about my extended warranty I never purchased so many times. 😣⁠
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#makingcentsmatter #budgets #monthlyincome #debtfreecommunity #realbudget #savingmoney #payingoffdebt #savings #frugalliving #frugalblogging #budgeting #monthlyincome #zerobasedbudget #financialgoals #personalfinance #personalfinancetips #financialfreedom
March Debt Paid numbers are in!⁠ .⁠ House: $51 March Debt Paid numbers are in!⁠
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House: $511.13⁠
Citi: $0 – this has a residual $3 in interest charges since payoff, due in April⁠
D NelNet: $100⁠
K NelNet: $100⁠
K Chase: $600⁠
Explorer: $336.27⁠
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Total Paid in 2021: $8,258.84⁠
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Extra Payment: There isn’t one this month since we were $25 away from zeroing out the budget for our February 15th monthly paycheck. That $25, and monies left from our January 15th paycheck, covered our OOP costs for Hubs’ filling. We also have some savings goals coming up that need to be met, making our debt payments a little lower for the time begin.⁠
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#makingcentsmatter #debt #debtfreejourney #debtfreeprogress #debtfreecommunity #realbudget #savingmoney #payingoffdebt #savings #frugalliving #frugalblogging #budgeting #monthlyincome #zerobasedbudget #financialgoals #personalfinance #personalfinancetips #financialfreedom⁠
The battle for who can charge what tonight is abou The battle for who can charge what tonight is about to begin. 😬⁠
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My kids run off with my charger, plug it into one outlet 5 feet from where they found it like that particular outlet is the only one in this house, and then proceed to fight over who can charge their device first at night.⁠
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Then they get grumpy when it's their turn and it's not the proper input cable. #itwasmychargerfirst #dontlikeitgofindyourown⁠
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A needs his wisdom teeth taken out. I've talked a A needs his wisdom teeth taken out. I've talked a bit in our February Budget Check-In about how much of this I think we'll owe, and you can check that out on my YouTube channel if you're interested, but I wanted to say here...⁠
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To the mother with little kids struggling to get your finances in order, it will get better. I wish I could have heard those words years ago.⁠
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Nearly 10 years ago we were facing a $1,400 out-of-pocket portion for A's Phase 1 orthodontic work (I looked it up after I uploaded the video... we had a $1,400 portion).⁠
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It was a lot of money for us at the time. Our kids were 6, 2, and 3 months old. I don't think we even had $500 in savings, and I just left a part-time teaching job because it wasn't paying the part-time daycare bill, so paying our portion in full was just a dream I didn't think was achievable.⁠
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I was even stressing about the monthly $100 payments. We were so strapped. It was our breaking moment to start cutting costs and budgeting more effectively. We've learned a lot in that time period.⁠
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What we've learned is that it does no good to stress about it all the time. Life happens. All you can do is try to plan ahead, and if it's something that's unplanned, readjust. It won't always be easy, especially at first, but it will be worth it.⁠
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Nearly 10 years later, we are still paying off our debts. Student loans suck. But I see this bill as a reminder of how far we have come. Seeing a bill like this doesn't stress me out like it used to, and I know we can easily create a plan that can get it done and out of the way.⁠
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Will it delay our debt-free date more? Yes. But it's not worth stressing over. Life happens, readjust, and continue on down the path. It's called a journey for a reason.⁠
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It's almost payday! Here's how our variable budget It's almost payday! Here's how our variable budgeting categories are working out for the pay month.⁠
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Food is looking good this far into our paycheck, probably because miscellaneous - which includes eating out - took a hit with unexpected purchases. Pet is low for this time of the month, and Household is spot on.⁠
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Fuel looks like it'll be lower than last month (yay for weeks of snow days & delayed school starts), and Therapy had one more appointment than initially planned.⁠
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Garden, Dental, Medical & Propane are not included in these estimates so far because those expenses are coming from sinking funds. Once we're done with the month and review the budget, I'll move over the total amount spent from those sinking funds.⁠
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How's your paycheck budget coming along?⁠
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#realbudget #monthlyincome #monthlybudget #budget #budgetupdate #budgeting #savingmoney #variablecategories #savingmoney #savings #debtfreecommunity #debtfreejourney #cash #financialgoals #personalfinancetips #personalfinance #frugalliving #frugalblogger #budgetblogger #makingcentsmatter
Automating your finances makes saving money and bu Automating your finances makes saving money and budgeting more convenient, and therefore easier on you. Out of sight, out of mind, right?⁠
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What's one thing you can automate this week to make your finances easier?⁠
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Me? I'm going to set up our sinking fund transfers to automate every payday (the 15th of every month). Our bank set up a feature on their app where we can schedule savings transfers now, and I'm going to take advantage of it!⁠
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Oh my word... our miscellaneous category has gone Oh my word... our miscellaneous category has gone a smidgen overboard this month!⁠
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I foresee a goal for March's paycheck to at out less than twice. That's where this category went awry. $99.16 of it went to eating out. 😑 Some of it was avoidable, but not all of it. Having to drive to multiple appointments in one day during snow squalls and rearranging our whole day was one of those unavoidable instances.⁠
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Tracking our expenses - much like a budget review - is vital to sticking to your budget!⁠
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#makingcentsmatter #debt #debtfreejourney #debtfreeprogress #debtfreecommunity #realbudget #budgetcategories #monthlyincome #savingmoney #savings #frugalliving #frugalblogging #budgeting #zerobasedbudget #financialgoals #personalfinance #personalfinancetips #financialfreedom #expensetracking #budgetfail
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