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Living frugally is a choice every day. It is a process and a mindset. Living frugally means each part of life is touched to live below your means and enjoy financial freedom rather than succumbing to the materialistic culture of our society.

These family budget categories will teach you how to start a budget, to begin living frugally, and to enjoy living on a budget.

So, you want to start a budget.

• Have you been thinking about starting a budget? But you aren’t sure what categories to include on your budget worksheet?
• Not sure how to make it organized or worthwhile?
• Do you want a list of budget categories to stay better on a budget for you and your family?
• Do you want to start living frugally and live below your means?

You’ve come to the right place, sweet friend.

I’ve put together a list of budgeting tips and budget category ideas for families likes yours. I love to talk about finances (I’m kind of a nerd). And I’d love to help you begin to track expenses and live on a tight budget even if you’re already behind on bills!

P. S. Before you get started, if you’re looking for a Simple Budget Worksheet Printable, here’s one to download!

Beginner’s Guide to Family Budget Categories

In this article, I’ll break down the following major family budget categories into smaller bite-sized pieces to help you track better and really start preparing for all of your expenses.

The hardest part about managing your budget is the “surprises.” But I’ll tell you right now, most things wouldn’t be a surprise if you thought about it. I mean come-on… Christmas is the same time every year and it’s one of the reasons so many people go into debt!

If this sounds like you, then the Simplified Budget for Families might be for you. Also, you might like this Christmas Budget Planner to save throughout the year!

Here is a little table of contents to help you out. Feel free to click on a category to jump to that budget category list:

• Why we love YNAB
• Flexibility is the key to budgeting
• General “Rules” for Budgeting
• Giving to Others
• Home Expenses
• Medical and Dental Expenses
• Child and Kid Expenses
• Transportation and Auto Expenses
• Monthly Subscription Fees
• Other General Expenses
• Pay off debt faster
• Short and long-term savings goals for families

About Our Family

I put together this AWESOME list of all the budget categories we’ve used in the past or currently use.

[click_to_tweet tweet=”This all-inclusive list of family budget categories will help you and your family start living on a tight budget today!” quote=”This all-inclusive list of family budget categories will help you and your family start living on a tight budget today!”]

I have been budgeting consistently for 8 years for my husband and I.

Yes, I run the finances in the house (re: already mentioned that I’m kind of a nerd). When we both worked full time with consistent income, “budgeting” was a “no-brainer.”

But, then we started having kids in 2013 and added in the variable diaper, daycare, and babysitting costs.

In 2014, we bought our first home but at the same time, my husband quit his full-time job to pursue his dreams in the golfing world – a very irregular, variable income job (to say the least)!

This meant I had to refine our budget and crack down on extra spending! Like, for reals! We learned to living on a tight budget (and continue to learn today!)

Throughout the years, I’ve used several different budget categories on my budget worksheet.

I’ve renamed them throughout the years but for the most part, they are the same. I started with an excel spreadsheet to set-up the budget that a teacher gave me in college.

I’m not sure about other universities, but this personal finance class was one of the most helpful and realistic classes I took in college! I still (sorta) use that excel spreadsheet today to help me plan my budget.

I’ve adjusted it and fixed it up to meet my needs. (And, now it can be yours!)

Then I transfer my budget over to YNAB* (more below).

There are affiliate links in this post. This means if you click on a link, I might receive a commission at no additional cost to you. Affiliate links are marked with an (*).

Related Article: A Minimalist Baby Essentials List

How to start living on a budget: Family Budget Categories

Why we ♥ You Need a Budget (YNAB)

I’ve used different naming techniques in order to track bills and expenses in an app/website called You Need A Budget (YNAB), which is the budgeting app that we use (Try free for the first 34 days!).

If you haven’t heard of YNAB (said, “why-nab”), then you should definitely check it out!

This website changed how we budgeted and helped us pay off $90K in loan debt in less than four years! It has a mobile app that allows you to log expenses on your PHONE while you’re at the store. Both you and your spouse can have access to it and update it providing real-time budget category amounts even if they haven’t processed in your checking account yet! This is critical to staying on budget!

But anyway, I could talk about YNAB forever, and maybe I will do a longer post about it later but you are REALLY here about the budgeting categories. I totally understand.

So, as I mentioned before, I wanted to share some budget categories you can add to your list if you’ve started one! Or this will help you get started TODAY. This is a comprehensive list for new Budgeteers committed to living frugally in 2018! There might even be some new ones for you seasoned budgeters out there!

I just mentioned YNAB here because it is a GREAT tool to track and manage your budget (and again, try free here for 34 days, plus you can help me get a little money towards my annual YNAB costs. Thanks!)

Flexibility is the KEY to budgeting

Some of you may be freaking out a little even thinking about a budget. And that’s okay.

I understand that there’s a lot of stigma around the word budget. It conjures up thoughts of prisons and restrictions and stress. But, it DOESN’T HAVE TO BE THIS WAY.

Contrary to popular belief…. budgeting is about flexibility and knowing where you’re at! It’s not about being super strict or unforgiving. It’s about finding a process that works for you to get control of your money, instead of letting it control you.

A note about this list, adjust as you need! For example, if you don’t have a Costco/Sams membership then obviously it doesn’t apply to you! Take off expenses you don’t have, or simplify the list. Whatever works for you! I personally like lots of detail (but again, I’m kind of a nerd). But sometimes simple categories of food vs groceries & restaurants might be helpful for you!

Before I give you the LIST, I want to discuss a few general guidelines for budgeting (for you New Budgeteers). Then I will lay out the list (with a few details on some of them). I also want to give you the general disclaimer… I am not a finance expert and don’t pretend to be! But I do claim to be a MOM with a REAL BUDGET that has worked for us. And that’s what I want to share with you.

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General “Rules” for Budgeting: Budget Categories and Percentages

– The #1 rule is to communicate with your spouse/significant other!

Start the money talk now in a non-confrontational way. If you’re like my family, I LOVE talking about money and budgeting, but it’s not my husband’s favorite topic. But he recognizes the importance of being on the same page and building trust and partnership when it comes to money. Make sure you work with your spouse on this!

– Spend no more than 30% of your monthly income on your home

– Spend no more than 10% on auto expenses

– Spend no more than 50% on other expenses

– Maintain a savings account of at least $1,000

– Save at least 10% of your monthly take home income

– Pay off debt in order of highest interest rates

– Save for annual expenses every month so you can prevent the debt cycle

– Track your expenses so you know where your money is going

The All-Inclusive List of Budget Categories

Giving to Others

• Tithe
• Other Donations

Budget Category Tip: Practice giving generously and living below your means. Set aside a little each month to give to others. Whether you are a church goer or not, practicing generosity will incentivize you to save more. It’s counter-intuitive I know, but give it a try!

Home Expenses

• Mortgage/Rent
• Water
• Electricity
• Gas
• Trash/Garbage
• Home Owner’s Association Fee
• Home Upgrades – For when you are renovating, want to update the kitchen, etc.
• Home Maintenance – For those maintenance things like replacing sprinklers, paint touch-ups, etc.
• Home Supplies – For things light light bulbs, laundry detergent, dish detergent, etc.
• Cable TV
• Internet
• Renter’s Insurance

Budget Category Tip: As I mentioned, try not to spend more than 30% of your monthly income on housing expenses combined. This might mean you need to downsize or change locations.

If that’s not possible, try saving money by lowering your electricity and water usage bills. Some of these bills might be combined, but it depends on your area!

So start with figuring out your average ANNUAL spending for each of these categories and divide by 12. Some months you will spend more on water (like summer and watering your yard) or winter and gas (if you have a gas heater).

Medical and Dental Expenses

• Medical Insurance
• Dental Insurance
• Annual medical deductible
• Life Insurance

Budget Category Tip: There are common insurance payments you will have to make monthly. Make sure to include the amount you will have to pay in co-pays for any of the insurances you currently have as well! 

Child and Kid Expenses

• Child Care – Don’t forget baby sitting money!
• Kids Everyday Expenses – I include things like clothes, tooth brushes, and hair products.
• Kids Activities – Activities like swim lessons in the summer or gymnastics in the winter
• Kids Big Purchases – Car seats, strollers, or other sports equipment fall in this category for us (See our favorite car seat and stroller here)

Budget Category Tip: If you are a new mom, you may be wondering what type of expenses you will have every month. Child Care is the big one, but don’t forget about clothes for your kids, car seats, and activities later on.

There are lots of ways to save money in these areas, but you still need to set aside some money for them! I talk about Day Care 101 in this blog post!

Transportation/Auto Expenses

• Car Payment
• Gas
• Tolls
• Car Maintenance and Repair
• Car Registration
• Car Insurance

Budget Category Tip: Spending 10% or less of your budget on your car and travel expenses is probably counter-cultural. But unfortunately, as soon as you drive a car off the lot it loses values. And you are literally BURNING money when you drive your car and use up gas.

To reduce expenses, try carpooling, riding your bike, or walking places that are nearby. Buy a smaller or slightly used car. These expenses can vary widely based on your commuting distance, how old your car is, and the rules for registration in your state.

Monthly Subscription Fees

• Phone Bill
• Netflix
• Apple iTunes cloud services
• Amazon Prime Annual Membership
• Spotify Monthly Fee
• Costco/Sams Membership

Budget Category Tip: Don’t forget about those monthly bills and fees that add up quickly (but might not be that much individually). If you subscribe to services, take a look at them and add them to this list when you are creating your budget.

As a reminder, make sure you include any ANNUAL fees or subscription services that you use. Take that number and divide by 12 months so you can save for it all year and be ready to pay when it’s time!

Other Things to Include in a Budget: General Expenses

• Pet food/vet expenses
• Clothing
• Gym membership
• Personal Care/Hygiene
• Christmas Gifts
• Birthday/Mother’s Day/Other Gifts
• New Technology Replacement
  • This is for that new laptop or phone that you should be saving for monthly. Don’t wait until the last minute when it no longer works!
• Hospitality
  • If you love hosting, give yourself some freedom and set aside money to host visitors. Knowing you have money set aside will destress the financial situation and let you enjoy your company!
• Entertainment
  • Movies, putt-putt, you know the drill 🙂
• Hobbies
  • Rock climbing, photography, crocheting, knitting, collecting, etc.
• Spouse Marriage Insurance Premium (aka MIP)
  • Marriage Insurance Premium is money designated solely for each spouse to use on WHATEVER they want no questions asked. Even though I think spouses should work together on a budget and spending, sometimes having a little freedom to splurge on something that the other spouse doesn’t need to “approve” is a nice piece of “freedom” for your budget. So each spouse is able to set aside money for something they might want for THEMSELVES. And it’s an investment in the .financial health of your marriage… thus the marriage insurance premium,
  • We learned about this idea from one of my FAVORITE his/her marriage books, The Most Important Year in a Woman’s Life/The Most Important Year in a Man’s Life: What Every Bride Needs to Know/What Every Groom Needs to Know. It talks about the most important year in your marriage as the FIRST year. It is Christian based and is great to do as a study for a young married’s bible study or just to be read between you and your husband (even if you’re not Christian)! It covers topics like generational marriage issues, what your parents were like, tips to do and NOT do to build a relationship (like calling your husband by his father’s name when related to something negative… that’s a no-no in case you weren’t sure). We did it with our small group, and I feel like I learned a lot about my husband during this time!

• Stuff I forgot to budget for – Allow yourself some flexibility and create a category for purchases that just don’t quite fit. This is the key to flexibility! Just remember to spend less in another category to make-up for it!

Budget Category Tip: Have you ever spent more at Christmas than you realized? Or you didn’t budget enough throughout the year and you had to put Christmas gifts on your credit card?

Instead of paying interest on the gifts you bought, save throughout the year so you have enough money set aside to give as you see fit! Also, don’t forget about those pet expenses, both the monthly as well as the vet expenses that occur annually or in emergency situations (think: heartworm medicine).

Pay Off Debt Faster

• Minimum Credit Card Payment – Usually the highest rates, so pay these off first. Make sure you are meeting the minimum requirement so you aren’t paying FEES on top of interest.
• Extra Credit Card Payment
• Extra monthly/annual car loan payment
• Extra monthly/annual student loan payment

Budget Category Tip: If your goal is to get out of debt faster, plan to make an extra payment every year towards your car or student loans, and/or mortgage payments if you have one. Pay off the debt in order of the highest interest rates and then move onto the next payment!

Plan for extra payments throughout the year on a monthly basis. A little can go a long way toward saving money due to interest in the long run!

As long as you have $1,000 set aside at a minimum, the “experts” generally recommend paying off debt before saving for other long-term goals. Get out of debt first, then you can put all that extra money into savings when your debt is gone!

Short and Long-Term Savings Goals for Families

Ideas for savings goals:

• Kids College
• Roth or Traditional IRAs
• 401K Contributions
• Down payment for a new house –
• Vacation – Plan a fun vacation to reward yourself for all your hard budgeting work
• Build your wealth – let your money work for you in investments
• Emergency Fund – 3 to 6 months of cash easily available for emergency situations
• New Car – Don’t pay interest on a car payment, start saving for a new car AS IF you already had that loan. Put the money you are setting aside in an account to EARN some interest and let the money work for you. Then when you’ve saved enough, pay in cash!

I think you’d LOVE to join the 4-week Savings Challenge that gives you daily actionable tips right in your inbox to start saving $100s per month… I so want this for you! So don’t miss out on this opportunity to change your savings’ habits!

Budget Category Tip: If you have kids, thinking about college savings NOW is a must. At least THINK about it. If your plan is for your kids to earn a scholarship or pay their own way through college, then that’s fine, but just be IN THE KNOW. There are many college savings recommendations online. If you can’t set aside the recommended amount, just start with $10-$20 a month per kid and increase as you can.

Due to the idea of Time Value of Money, it’s better to start investing and saving NOW, whether it be for college or retirement. If you haven’t started a 401K with your employer or opened an IRA, start contributing for as little as $50 a month in most places.

Any other savings goals you have?

Want to take the kids to Disney world next year? Start saving now! Want to buy a house in 5 years, again, start saving now! Think about those long-term goals and set aside the money first!

Don’t forget to set aside $50 or so per month for an emergency fund.

If you don’t have $1,000 in your savings account, make that your FIRST priority.

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