Budget Categories: 10 Expenses To Include

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If you’ve ever tried to get your finances under control, then you’ve almost certainly tried to make a budget. And while we all know that budgeting is a great way to control your spending, it’s often easier said than done.

One of the most challenging parts of budgeting — aside from actually sticking to your budget — is creating one in the first place. A big part of it comes down to including the correct categories.

What Are 10 Categories in a Typical Budget?

While there’s some discretion and creativity that can go into choosing your budget categories, there are also some essentials that you’ll find in many budgets. These ten are a good place to start.

1. Housing

Housing is one of the most important line items in anyone’s budget. Not only does it appear in nearly every budget, but it’s also often the most expensive budget category. 

What your housing budget will include depends on your living situation. If you currently rent a house or apartment, your housing costs may be limited to your monthly rent and renters insurance. But if you own a home, it probably includes your mortgage payment, as well as property taxes, home repairs, homeowners association dues and more.

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Certain housing expenses, such as your mortgage, probably don’t change and are, therefore, easy to budget for. But budgeting for home repairs is more challenging since they change often and may come up at any time, so it’s a good idea to have some flexibility in this category.

2. Transportation

Transportation is another major item in most people’s budgets.

According to AAA, owning a new car costs most families over $9,000 per year. Transportation costs include gas. Depending on how often you drive, gas could be a major or minor item in your budget. Other transportation-related costs include car maintenance and your annual vehicle registration.

If you don’t own a car, you’ll need to budget for public transportation or rideshare costs.

3. Utilities

Another line item in your budget will be utilities, which will vary depending on where you live. For most people, utilities will include electricity, gas and water — though one or more of those may be included in your monthly rent if you live in an apartment. It may also include trash collection, sewage or recycling.

You may also consider your internet, television and phone service to be a part of your utilities. Most people pay for a cell phone plan and internet each month. You may also pay for a landline phone, cable and streaming services.

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4. Groceries

Groceries are another major expense for American families. According to the U.S. Department of Agriculture, food spending ranges from $4,875 per year for families with incomes in the lowest 25% to $13,973 per year for families with incomes in the highest 25%. Those figures break down to spending between $406 and $1,164 per month.

For budgeting purposes, it’s best to separate groceries from eating out. Yes, everyone has to eat. But while basic groceries are a need in your budget, eating at restaurants may be better categorized as personal spending.

5. Insurance

Most of us have several different types of insurance we pay for each month or year. While health insurance is often covered by an employer or paid for out of your paycheck — and therefore, it’s usually not a line item in your budget — other types of insurance probably do come out of your bank account each month.

The most common examples include auto insurance and either renters or homeowners insurance. And depending on your situation, you may also have life insurance, disability insurance, long-term care insurance and more.

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6. Healthcare

If you live in the United States, you almost certainly spend money on healthcare each year. And depending on the quality of your insurance and your health status, healthcare could be a major item in your budget.

First, many people have to pay high deductibles for their healthcare before insurance kicks in. Even for those expenses that are covered by insurance, there may be deductibles that apply.

Here’s a tip: If you have a high-deductible health plan, consider contributing to a health savings account (HSA). The money you contribute is tax-deductible, which lessens its impact on your budget. Additionally, you can take money out tax-free to spend on health-related expenses.

7. Childcare

If you have children who aren’t yet school-aged, then you may pay for childcare like a nanny or a daycare center.

According to a survey by Care.com, the average family expected to spend more than $10,000 on childcare in 2022. The good news is that unless you decide to send your child to a private school, your childcare costs largely disappear once your child enters kindergarten.

8. Personal Spending

Personal spending is a pretty broad category and can encompass just about anything that you spend money on that doesn’t fit into one of the categories above. Some examples of what you could include in your personal spending category are:

  • Clothing
  • Personal care products
  • Pet expenses
  • Household items
  • Entertainment
  • Dining out
  • Electronics
  • Shopping 
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9. Gifts & Donations

No matter your situation, chances are that you spend at least some money each year on gifts and donations. First, this category likely includes gifts you give to friends and family members throughout the year for birthdays and Christmas.

This category can also include any charitable giving you do throughout the year. Included in charitable giving could be regular donations you make to charity, donations you make to GoFundMe campaigns or even money you give to a friend or family member who is going through a difficult time.

10. Debt, Savings & Investments

The final category in your budget should include money that goes toward debt, savings and investments. In other words, your financial goals.

Certain debt payments will be mandatory in your budget — those might include your student loan payment or car loan payment. But you may also make other payments on your debt above and beyond your minimum payment.

Next, this category includes any saving you do for financial goals, both short-term and long-term. This would include building your emergency fund, saving for a down payment on a house or car, saving for a vacation and building an education fund for your kids.

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Finally, this category includes your investment accounts, whether you’re investing for retirement, saving for a major purchase or just investing to build wealth.

The Bottom Line

A big part of creating an effective budget is including the correct categories. Of course, your list of budget categories may not look exactly the same as the one above. Maybe you don’t have any debt, meaning you don’t have to include that on your list. Or perhaps you don’t have children, meaning childcare isn’t an expense for you.

On the other hand, some people may choose to get a lot more specific with their budgets. For example, instead of a personal spending category, you might break it down far more into categories like clothing, toiletries, entertainment, dining out, etc.

Ultimately, it’s your budget. And while there are some guidelines that can help improve your budget, the only real rule is that it has to work for you.


Ten budget categories might feel a little overwhelming, so here are the answers to some common questions about budget categories.
  • What are the four main categories in a budget?
    • Four major budget categories are necessities, wants, savings and debt repayment.
    • If you have debt to repay, it's a good idea to include it in your budget to make sure you always have enough to make your payments.
  • What is a three-category budget?
    • Three basic categories to include in your budget are needs, wants and savings. This is a good baseline if you do not have any debt, though you could also include debt payments in your "needs" category.
  • What are the five most common budgeting methods?
    • Five common budgeting methods are:
      • 1. Manual Budgeting: Good for beginners, this method involves tracking all of your spending and organizing it to understand your finances.
      • 2. Cash Envelope: Separate your money into physical cash in envelopes with labels to keep your spending limits firm.
      • 3. 50/30/20: Divide your budget into percentages. You can opt for the classic 50% to needs, 30% to wants and 20% to savings or adjust the percentages to fit your needs.
      • 4. Zero-Based Budgeting: Best for experienced budgeters, this method involves knowing where every single dollar of your income is going so that "zero" is unaccounted for.
      • 5. Pay Yourself First: If you have trouble spending too much and ending up with no money left, pay yourself first by sending part of every paycheck straight into your savings account.
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Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

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About the Author

Erin Gobler is a personal finance writer and journalist with experience covering topics such as investing, credit cards, mortgages, insurance and more. Her work has been featured in major publications like Business Insider, Fox Business and Time. Erin received her bachelor’s degree from the University of Wisconsin Oshkosh in 2013, studying journalism and political science.
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