A budget is a financial record of your income and expenses over a set period of time. People often calculate and analyze their budgets yearly, quarterly, or monthly. Some might even track their expenses daily if they’re adamant about getting a handle on where their money is going.
Your success depends on what you include in your budget. It’s important to account for every type of income and expense. The next chapter in this budgeting guide helps with that process by covering 10 types of expenses you should monitor.
Types of expenses
Each expense category affects your budget differently. Knowing what to include in your budget in terms of expenses is critical as you work toward your financial goals—whether that’s saving money, paying off debt, or something more fun.
Let’s start by breaking down the two primary categories of expenses: fixed and variable.
Fixed expenses
Fixed expenses are the expenses you can count on every month. They’re considered fixed because you pay the same amount each time. Some examples include payments for:
- Rent
- Car loans
- Student loans
- Mortgage loan
Variable expenses
As the name suggests, variable expenses vary. These amounts change month over month or might not be due at consistent intervals. Some examples of what to include in a budget spreadsheet from this category include money you spend on:
- Clothing
- Ride-sharing
- Dating
- Dining out
- Utilities
- Groceries
- Entertainment
- Gas
Expenses to include in your budget
Every budget is different. Families and individuals live diverse financial lives, which means your expenses might look completely different from someone else’s. But while the nuances might vary, expenses tend to fit into these broad categories.
1. Living expenses
Living expenses are your most essential expenses. Some examples include:
- Rent payments
- Mortgage payments
- Grocery bills
- Utility bills
- Household maintenance or repair costs
- Clothing costs
- Property taxes
- Home or renter’s insurance premiums
2. Transportation expenses
These expenses keep you mobile. They keep your car or motorcycle on the road, or your bus or subway pass current. Whatever you spend to get around falls under this category. Some examples include:
- Car payments
- Public transportation pass fees
- Toll fees
- Car insurance payments
- Gas costs
- Auto maintenance and repair costs
- Vehicle registration fees
3. Family care
If you have dependents or pets, your budget needs to reflect the costs of caring for them. Examples include:
- Child care or daycare expenses
- School supplies and fees
- Elder care costs
- Pet food and supplies
- Veterinary care costs
- Pet insurance premiums
- Babysitting or pet-sitting costs
4. Personal care
Taking care of yourself isn’t just good for your well-being—it’s an important part of your budget. Be sure to factor in the funds you spend on:
- Toiletries and personal hygiene products
- Haircuts and grooming services
- Clothing and shoes
- Laundry and dry cleaning
- Skincare and cosmetics
- Wellness treatments (e.g., massages, spa visits)
5. Health care
Your health is your wealth, as the saying goes. Make sure your budget includes funds that go toward keeping you healthy. This includes money spent on:
- Health insurance premiums
- Prescription medications
- Over-the-counter medicines
- Copays for doctor and specialist visits
- Dental and vision care
- Mental health services
- Gym memberships or fitness classes
6. Technology
In today’s world, technology expenses are a reality. Don’t forget to budget for:
- Smartphone plans and devices
- Internet service
- Computer hardware and software
- Streaming services (e.g., Netflix, Hulu, Spotify)
- Gaming subscriptions
- Tech accessories and upgrades
7. Debt payments
Managing debt is a crucial part of financial health. Be sure to consider all outstanding debt obligations, including:
- Credit card payments
- Student loan payments
- Personal loan payments
- Medical debt payments
- Any other outstanding debts or payment plans
8. Savings and investments
Planning for the future is just as important as managing your present-day expenses. Allocate funds for your:
- Emergency savings fund
- Retirement accounts (e.g., 401(k), IRA)
- Investment contributions
- College savings plans
- Other long-term financial goals
9. Entertainment
All work and no play makes for a dull budget. Don’t forget to set aside money for activities such as:
- Dining out or ordering in
- Movie tickets or streaming rentals
- Concert or event tickets
- Hobbies and recreational activities
- Books, magazines, or other media
- Vacation and travel funds
10. Miscellaneous expenses
Finally, create a category for those expenses that just don’t fit neatly elsewhere. This might include:
- Gifts for birthdays, holidays, and special occasions
- Charitable donations
- Professional dues or memberships
- Education or professional development costs
- Unexpected expenses or large purchases
Tips for managing your budget
Creating a budget is just the first step on your financial journey. The real challenge—and reward—comes from sticking to it and making it work for you. Here are some tips to help you manage your budget effectively:
- Track your spending: Record all your expenses using apps, spreadsheets, or a simple notebook. This helps you identify spending patterns and areas where you might be overspending.
- Review and adjust regularly: Your financial situation and goals may change over time. Make it a habit to review your budget monthly and adapt as needed.
- Use the 50/30/20 rule as a starting point: Allocate 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment. Adjust these percentages based on your circumstances. If that doesn’t seem like a fit for your lifestyle, you can try other methods like zero-based budgeting.
- Automate your savings: Set up automatic transfers to your savings account to ensure you’re consistently setting money aside.
- Plan for irregular expenses: Create separate funds for less frequently occurring expenses, such as annual insurance premiums or holiday gifts.
- Use cash envelopes for problem areas: If you tend to overspend in certain categories, try using categorized cash envelopes to limit your spending. This is called the envelope system of budgeting.
- Leverage budgeting tools: Explore budgeting apps and software that can help you track expenses and stay on top of your financial goals.
Putting your budget to work
Remember, budgeting is a skill that improves with practice. Don’t get discouraged if you don’t get it perfect right away. The key is to stay consistent, learn from your experiences, and adjust your approach as needed. With time and effort, you’ll develop a budget that helps you achieve your financial goals and live the life you want.
At Intuit, we’re committed to helping you live your best financial life. Visit Intuit’s library of financial literacy resources to expand your knowledge on concepts such as saving, investing, taxes, and responsible borrowing. You can also explore resources such as budgeting templates and budgeting apps to help you on your journey.
This content is part of our guide to budgeting. Keep reading to learn everything you need to know about starting, refining, and mastering the budget basics on your way to financial freedom.