Creating an ideal budget can be tricky as there’s no one-size-fits-all type of budget. A budget should suit our lifestyle and therefore, it’s important to identify what our priorities are.
However, even though there’s no one-size-fits-all type of budget, there are must-have categories for a budget to work accordingly. Here are the 13 must-have categories:
1. Saving
Savings is a must-have category and should be put as a number one priority. This means, when you receive a salary, you have to first allocate the amount you want to save (for new phones, travel, emergency, retirement, etc).
2. Debts
Like savings, paying debts off should also be your priority. Here is a post about how to get out debts.
3. Housing
Housing includes rent, or if you own a house, it includes mortgages, council rates, all relevant taxes for owning a house, body corporate fees, maintenance costs, etc.
4. Food
In this category, only include food that you make yourself for breakfast, lunch, and dinner. It shouldn’t include the food that you have when you’re socialising. Any social activities should be under ‘social outings’ category as explained later below.
5. Utilities
Utilities include things you use to support basic requirements to live a modern lifestyle, such as electricity, gas, water/sewerage, and telecommunications (telephone and internet). Some people would include cable TV under this category as well.
6. Transportation
If you have a car, include all expenses that relate to the car, such as fuel, tyres, batteries, insurance, registration, service and repairs.
If you don’t have a car, include all public transport, taxi, or car hire expenses under this category.
7. Medical
No matter how healthy you are, you’ll still have to set aside some money to cover your medical bills. If you have health insurance, then put the fees under this category. In some countries like Australia, health insurance is not a must and therefore, those who don’t have any health insurance can depend on government support. But there are expenses that are not covered by the government, such as dentistry, chiropractor, ambulance, and medicines. Research on how much they cost per treatment and see if you can get a better deal by having private health insurance. Otherwise, try to allocate at least $2000 a year in your medical budget.
8. Education
If you have kids, put all school expenses here. If you don’t have kids, you can either take this out or use it for your own education to advance in career, business, spirituality or passion.
9. Fun
Fun is also one of the must-have categories. It can include personal treatment like manicure pedicure, massage, spa, video games, movies, books, etc. However, this doesn’t mean you have to spend money to have fun. There are many fun activities that don’t require money. Here are 20 ideas for indoor entertainment and 20 ideas for outdoor entertainment.
10. Social Outings
This category should relate to all social activities, not just food and drinks but also gifts, accommodation, transportation, and all related costs.
11. Gifts
This category should include gifts for birthdays, anniversaries, and all holiday celebration gifts.
12. Charity
Whether you’re a churchgoer or someone who cares about the disadvantages, you may want to give some to those in need.
13. Miscellaneous
Even though you may already set an ‘emergency’ category under ‘savings, it’s better to also have this category separately to cover unexpected expenses like broken windows, parking tickets, or speeding fines.
