5 Surprising Categories that Should Be in Your Budget

Budgeting is a necessity. However, it doesn’t need to be a negative chore. You can make budgeting a fun experience and use it as motivation to keep on track. When you have a budget…more importantly, when you stick to a budget, you put yourself in a position to succeed. All budgets should have categories for your money. I’m sharing a few surprising categories that should be in your budget.

Before we dive into creating categories for your budget, it’s important to understand that your budget should be written down. You can have it set up in an app, a spreadsheet, or physically written. It doesn’t matter what form your budget is in, as long as it’s out of your head! Free up mental space for other things by having your budget somewhere handy.

Why your budget needs categories

When you are creating your budget, you will want to allocate your income to certain things. This is where the concept of “categories” comes in. There are different ways to categorize your income so you can follow your budget. At minimum, you should have general categories in your budget. You can create general categories like food, recreation, housing, and debts.

You can then take it a step further and create sub-categories for the general category names. For example: you have your general category as “Food”. Your sub-categories under “Food” would be groceries, meals out, and work lunches. The more specific you get with your categories and sub-categories, the better able you will be to identify how much money should go where.

This is probably the most critical reason why every budget needs categories. If you simply allocate your income by bills and spending due each pay period, you aren’t getting specific enough. The more specific you are with where your money goes, the less likely you will be to overspend. Obviously, you can set the categories and not follow it, but I know you’re better than that! 😊

5 surprising categories that should be in your budget

As you are creating your budget categories, you can download my budget category checklist to give you a nice head start. If you already have an idea of your budget categories, then great! There are certain areas people leave out of their budget when they shouldn’t. Failing to allocate money to necessities or important items can lead to an ineffective budget.

Category #1: Health-Related Items

Most people leave health-related expenses out of their budget because they think insurance will cover it. For the most part, that isn’t the wrong way to think. However, if there are certain expenses insurance won’t cover, or if you have to pay your co-pays out of pocket, it can do you good to budget for health-related expenses. Expenses like over-the-counter and general medicine, contact lenses, glasses, appointment co-pays and physical therapy should be factored into your budget.

Category #2: Personal Care

Another area people tend to leave out of their budget is personal care. Maybe they don’t leave it out of their budget, but combine it with discretionary spending. Personal care isn’t necessarily discretionary. In fact, taking care of yourself is a necessity. Personal care expenses can include things like massages, fitness classes, nutritionist fees, and therapy.

Category #3: Miscellaneous

Ah, miscellaneous. It’s so vague, especially in terms of your budget…but that’s the point! I always recommend clients factor in a miscellaneous category into their monthly budget. Meaning, they should have funds allocated each month towards miscellaneous spending and expenses. What does “miscellaneous” spending and expenses mean?

Well, I would categorize miscellaneous spending as one-off or non-recurring expenses that aren’t necessarily emergencies, but also don’t need to be factored into a regular budget cadence. If you don’t factor in gifts and events into your budget, then miscellaneous funds can cover those things. Miscellaneous funds can also cover one-off purchases that don’t fit into another budget category, one-time subscription fees, and necessary expenses that weren’t already accounted for.

Category #4: Pets

We can’t forget about our little fur babies! If you have any type of pet, then you likely have expenses associated with that pet. Your pet expenses may not be monthly, but they are definitely recurring on a semimonthly, semi-annual, or annual basis. That means you should factor in a monthly savings for those pet expenses. Nothing is worse than having your money budgeted to the “T” and then you forgot to think about your pet’s annual vet visit!

Category #5: Development and Growth

Another very important area that should not be neglected in your budget is personal development and growth. This could look different to everyone, but things like new books, a library subscription, workshops, career-growth events and mixers, a finance coach, and online courses fall under this category. Anything you would spend money on to increase your knowledge and grow in any particular area can be categorized as development and growth.

Finding the balance between priorities and fun

A lot of people struggle with finding a balance between life’s priorities and fun when allocating their income. I would recommend the Money Management Mastery program, which outlines the best way to prioritize your income. There are quite a few budgeting methods that work. Everyone’s money style is different, so it’s all about finding what works for you.

At minimum, you will want to make sure that your income is first allocated to your living expenses and necessary bills. Then, you’ll want to allocate money towards saving and additional debt repayment. Lastly, your income should be allocated to the things you like, but aren’t a necessity for living. As long as your priorities are covered, you have money being saved consistently, and you’re paying down debts, the rest can be spent on things you want!

If you’re struggling to allocate your income properly, schedule a free financial focus call with me now and let’s work through it together!


Related: 10 Budget Categories You Can do Without

A budget is the number one tool for financial success. You can’t get to the next level with your money until you’ve created a budget and mastered how to follow it! Making sure your income is allocated to the right things is crucial! What budget categories do you keep in your budget? Have you thought about the categories listed above? Post a comment below to share!

The CGS Team



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