I’m realizing this more and more. Many ask what type of categories they should use when writing their budget. This is not always a simple process. I’ve recommended in the past to gather one to three months of receipts so that the solution becomes more evident.
That works, but I think it is important to understand that you’ll probably be adjusting your categories along the way. Let’s say you shop at Wal-Mart for both your groceries and pet care items. You might want to combine these two categories and budget accordingly. That way, you won’t have to make two silly transactions with your envelope system at the register.
Of course, if you wanted to keep your categories more diversified, you could use a combination of a virtual envelope budgeting system and a cash system. This, however, isn’t always the best method; software makes money seem more surreal . . . which may cause you to spend way more than you intended.
Come to acceptance that your initial attempts at creating budgeting categories might not work smoothly. It’s okay, just adjust as you go and keep pressing on! My wife and I are starting to realize this. Sometimes purchases including several categories are not very easy to manage. We’re working on a solution that is right for us, and we’ll let you know when we figure it out.
I’d like to say that a specific set of budgeting categories fits all, but it can’t. No doubt, there are some great suggestions out there, but they are only meant as a launching point to get yourself started. Here are our categories to show you where we’re at:
- House payment
- Electricity
- Groceries
- Debt Repayment
- Life Insurance
- Personal Care
- Pet Care
- Medical
- Phones
- Internet
- Car Insurance
- Home Maintenance
- Hair Appointments
- Gifts
- Garbage
- Automobile Gas and Oil
- Fun Money
Some people have many more categories than this, which is understandable. Others only need a few categories. How about you, what are your budgeting categories? Put your list in the comments and let’s talk this through.
graphic of envelope by Timothy Morgan
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