10 Common Monthly Expenses To Include In Your Budget
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By having a list of your monthly expenses and pairing that list against your monthly income, you can arrange your spending in a way that aligns with your true financial goals.
I used to abhor the idea of using a budget. Budgets made me envision a life of a ball and chain existence where I wasn’t allowed to have any fun or spend any money outside of basic expenses.
However, after I started consistently using a budget five years ago, I found that budgets really do promote freedom, not chains.
Most Common Monthly Expenses
Typical monthly expenses can be broken down into several basic categories.
- Housing
- Food
- Child-related expenses
- Debt obligations
- Health & Fitness
- Transportation costs
- Personal care
- Pet care
- Entertainment
- Miscellaneous expenses
Let’s talk about each category and what types of expenses you might assign to each one.
1. Housing
Home expenses will include everything related to your home, including items such as:
- Your monthly rent or mortgage payment
- Maintenance costs include landscaping, replacement light bulbs, etc.
- Repair costs, such as a need for a new vacuum, furnace, flooring, etc.
- Utility bills such as electric, natural gas, and water
- Property taxes (unless they’re collected with your house payment)
Some of these types of costs may fluctuate each month, so you’ll need to consider that when you create a monthly budget.
One good way to prepare for larger costs, such as a new furnace, is to have a special savings account where you put money aside each month, specifically designated for large home repairs in the future.
2. Food
Food expenses can include any costs you spend on eating, such as:
- Weekly and random grocery trips
- Money spent on school meals for your kids
- Drive-thru runs or takeout meals
- Food costs associated with work, such as lunches, coffees, etc.
You may do things differently, but some people also add restaurant trips in this category.
We put restaurant trips in the entertainment category unless we go purely because we need to eat and aren’t near home.
In those cases, we add restaurant trips to our food category.
3. Childcare
Child-related expenses can include anything related to your child’s care that is not included in your health care expenses, which I recommend tracking separately.
Some ideas include:
- Daycare expenses
- Extracurricular expenses, such as hockey or dance
- New toys that aren’t gifts for a birthday or other holiday
I don’t add health care expenses in this category; we’ll discuss those in another category.
4. Debt
Some people like to divide debt payments into the individual categories they relate to, such as putting their car payment into the “transportation” category.
Others find it more helpful to keep ongoing, monthly debt payments in a separate category.
Debt obligations might include:
- House payments or home equity loan payments
- Car payments
- Credit card payments
- Student loan payments
- Child support or alimony payments
Of course, you can categorize them however you like; just be sure to include them in your monthly expenses when working with a budget.
5. HealthCare
Health care expenses are essential to track because, believe it or not, it’s possible to waste money in health care just as it is with any other category.
One benefit of having a budget and tracking your expenditures each month is that you will more easily recognize where you’re wasting money.
In the case of health care, waste can be as simple as choosing a name-brand drug over a generic drug.
Examples of health care expenses:
- Payroll deductions for health care, dental, and vision coverage
- Costs for monthly or occasional prescription and over-the-counter meds
- Payments for doctor and dentist bills
- Deductions for monthly savings going into an HSA (Health Savings Account)
Again, with healthcare expenses, it can be helpful to save in advance if you’re expecting a considerable medical expense down the road, such as surgery, the birth of a child, or braces for one of the kids.
If you qualify for a health savings account, it’s a great way to do that, and it offers extra tax advantages.
Tip: Want an easy way to budget? Check out Tiller which uses spreadsheets but pulls in all of your bank account info automatically.
6. Transportation
Transportation expenses can include any money you spend to get where you need to go, such as:
- Car payments (unless you’re putting them in the “debt obligations” category)
- Public transportation costs or ridesharing costs
- Gasoline costs
- Vehicle maintenance and repair costs
- Monthly savings for the future purchase of a new vehicle
Saving toward the future need for a replacement vehicle is important to avoid having to take out a loan when the need arises.
Trust me: you’ll love paying cash for your next car.
7. Personal Care
Personal care expenses include anything needed (or wanted) to take care of yourself, such as:
- Toiletries like soaps, shampoos, toothpaste, shaving cream, razors, etc.
- Gym memberships
- Salon expenses for haircuts, manicures, etc.
And any other costs associated with the care and maintenance of the people in your family.
8. Pet Care
Pet care expenses are any costs associated with having pets.
Some examples of pet care expenses:
- Purchase of a pet and any coordinating care items
- Veterinary bills
- Pet grooming costs
- Food, toys, and treats for pets
- Care for pets if you are away and they need to be cared for by someone else
Pets can be expensive, and it’s a smart idea to monitor your spending on them to help ensure you can afford their care and upkeep.
9. Entertainment
Entertainment expenses include any money spent on having fun.
In your entertainment category, you might include:
- Weekly date nights
- Trips to the movies
- Trips to museums or theme parks
- Vacation expenses
- Purchases you make just for fun, such as buying a new movie on DVD
- Restaurant trips that are just for fun
Any non-necessary expense you have to have fun will go into this category.
Again, especially for vacations, it’s helpful to save money ahead of time so you can pay cash for your vacation when the time comes.
10. Miscellaneous
Miscellaneous expenses would include any items that don’t fit into the above categories. Some ideas might include:
- Gifts for birthdays and other holidays
- Donations to charitable organizations
- Monthly miscellaneous spending for each spouse (Deacon likes to call it guy/girl money)
- Any other expenses that don’t fit into other categories
In other words, if you can’t find another category that seems right for an expense, you can always add it to the “miscellaneous” category.
Now that you know the types of common monthly household expenses, you can create a budget that works for you.
What if I Don’t Have Discretionary Income?
Sometimes when people create a budget, they find nothing left over to save or pay extra toward debts.
In some cases, people find that after creating a budget, they’re actually in the hole, meaning they have more expenses than income.
If you’ve created your budget and found that you have more expenses than income, you’ve got two choices: cut your expenses, or increase your income.
Slash Your Expenses
If you need to reduce your monthly expenses, it might help to do a “challenge everything budget”. The link explains it in detail, but basically, your goal is to go through every line item on your list of monthly expenses and ask yourself one question:
“How can I reduce or eliminate that expense?”
This might mean that you have to buy used DVDs instead of going to the movies, stop eating out, or stop spending money on salon trips for the time being, but it will be worth it as you improve your financial situation.
As you do this, you’ll likely find that your budget numbers are turning the tide and you’ll have more extra money to reach your goals with.
Increase Your Income
Another way to put your budget in a better situation and overcome any budget deficits is to increase your income.
Luckily, there are dozens of side hustle ideas that will help you do that. Once you find the right side hustle(s) for you, you can start making more cash and improving your financial situation for the long term.
Summary
Monthly household expenses are a part of life. However, if you manage them right, you can be sure you’ve enough money to cover them all and have cash to reach your financial goals.
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