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TRENDING BASIC MONEY MANAGEMENT TIPS
04.15.2020 / Budgeting « Back to all articles
5 Important Key Categories in Every Budget
The Importance of a Budget
Budgeting is not typically something people enjoy as it can be tedious and time consuming. However, the purpose of budgeting is to identify the money that is coming and going, minimizing stress and unnecessary worry. Once you get into the habit, it doesn’t take very long to maintain. Including these 5 key categories into your monthly totals will spell budgeting success for any household.
Housing Expenses
These are the big, fixed expenses related to your housing. Most people’s largest bill every month is for the mortgage or the rent, so that goes first. All utilities go under this category, as well. Trying to remember every utility on the spot can be difficult, so take care of it beforehand – make a list and keep those bills paid. Power, water, and Internet are just a few bills that come every month and are usually steady in their prices, so it’s easy to deduct them first.
Transportation Expenses
Taking care of the car comes next. Or, if you ride the bus or subway, the fees that come along with that should be totaled up. The car payment is usually substantial, and car insurance comes right after that. But it is important to also budget for gas and repairs. Gas expenses can fluctuate, so be sure to keep a conservative estimate, and don’t wait until a breakdown to try to gather money for a fix. Set some aside every month and don’t spend it on anything else!
Food & Grocery Expenses
Setting aside grocery money is not only a smart financial decision, but it helps keep a budget in check when choosing to go to the store for ingredients rather than out to restaurants. This will save money and it’s also much healthier. If the plan is eating out a lot, budget for that, too. Those little expenses, such as tips to the waitstaff, will sneak up on you, so “spend” them on paper first.
Irregular Expenses
Some expenses do not come every month like a phone bill, but they are still important and can wreck the budget if not accounted for correctly. Clothing, gifts, haircuts, and other incidentals are just a few examples. When a new pair of shoes is needed, having a budgeted category will help a person spend wisely and freely rather than going overboard on spending and then feeling remorseful about it later. This category includes monthly subscriptions like streaming or other memberships too.
Debts & Savings
This is possibly the least glamorous of all the categories. Debts need to be paid off, and savings need to be taken out. Credit cards, student loans and other amounts that have been borrowed have monthly minimums, but a budget can help you do more than that and pay it off early. Once you’ve set aside how much you are able to realistically save for the future, the rest is yours!
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04.15.2020 / Budgeting « Back to all articles
5 Important Key Categories in Every Budget
The Importance of a Budget
Budgeting is not typically something people enjoy as it can be tedious and time consuming. However, the purpose of budgeting is to identify the money that is coming and going, minimizing stress and unnecessary worry. Once you get into the habit, it doesn’t take very long to maintain. Including these 5 key categories into your monthly totals will spell budgeting success for any household.
Housing Expenses
These are the big, fixed expenses related to your housing. Most people’s largest bill every month is for the mortgage or the rent, so that goes first. All utilities go under this category, as well. Trying to remember every utility on the spot can be difficult, so take care of it beforehand – make a list and keep those bills paid. Power, water, and Internet are just a few bills that come every month and are usually steady in their prices, so it’s easy to deduct them first.
Transportation Expenses
Taking care of the car comes next. Or, if you ride the bus or subway, the fees that come along with that should be totaled up. The car payment is usually substantial, and car insurance comes right after that. But it is important to also budget for gas and repairs. Gas expenses can fluctuate, so be sure to keep a conservative estimate, and don’t wait until a breakdown to try to gather money for a fix. Set some aside every month and don’t spend it on anything else!
Food & Grocery Expenses
Setting aside grocery money is not only a smart financial decision, but it helps keep a budget in check when choosing to go to the store for ingredients rather than out to restaurants. This will save money and it’s also much healthier. If the plan is eating out a lot, budget for that, too. Those little expenses, such as tips to the waitstaff, will sneak up on you, so “spend” them on paper first.
Irregular Expenses
Some expenses do not come every month like a phone bill, but they are still important and can wreck the budget if not accounted for correctly. Clothing, gifts, haircuts, and other incidentals are just a few examples. When a new pair of shoes is needed, having a budgeted category will help a person spend wisely and freely rather than going overboard on spending and then feeling remorseful about it later. This category includes monthly subscriptions like streaming or other memberships too.
Debts & Savings
This is possibly the least glamorous of all the categories. Debts need to be paid off, and savings need to be taken out. Credit cards, student loans and other amounts that have been borrowed have monthly minimums, but a budget can help you do more than that and pay it off early. Once you’ve set aside how much you are able to realistically save for the future, the rest is yours!
