Categorizing the budget help with understanding where money goes, therefore giving the opportunity to redirect expenses. In this challenge the ideal is to maximize saving by spending less. Prioritizing expenses to take care of need is the ultimate goal. There are nine major categories of spending. Eight of these categories can be considered needs. The ninth one is a “don’t need”, but it is where some of your money is going.
The nine categories are:
GIVING
In your budget consider taking out your tithes and offering first before and put it aside. We are admonished to give 10% but you can decide in your heart the amount that you want to start with and work your way up to 10%. Like everything that is in your budget let it be realistic and manageable so you can do it consistently.
SAVING
is considered paying yourself first. Which means you put money aside before you pay your bills. Your goal is to be paying yourself at least 10% of what you earn.
SHELTER
is often the larges expense. The following expenses fall into this category: mortgage, rent, property taxes, electricity, water, gas, heating oil, maintenance, home phone, cell phone, cable or satellite, televisions, internet, and storage. There might be other items you might need to include in the category.
FOOD AND DRINK
includes your groceries, dining out, snacks, vending machine purchases and morning coffee rituals
CLOTHING
is an essential need. Some items to include in this category are shoes, laundry, dry cleaning, some accessories and alteration cost.
TRANSPORTATION
includes car payments or lease, gas, vehicle taxes, maintenance, parking, subway, bus pass, tolls and taxi fares.
INSURANCE
include your home or renter’s insurance, car insurance, health insurance, disability insurance, long-term care insurance and life insurance. Everyone might not need every type of insurance mention.
PERSONAL/MISCELLANEOUS
this category is combine of everything that does not fit in the seven category mention above. They are some of the items that will fall in this category: accessories for hear and beauty, alimony, child support, entertainment, medicine, pets, hobbies, gifts (birthday, graduation, Christmas etc.), movies magazines and vacations
DEBT AND CREDIT CARDS
paying on your debt or credit card is not a spending category because it is not a need. Include all debt other than mortgage and car loans in this category.
