The Budget. Categories & how to track it.

The foundation of saving is know where your money goes. We know how much we make, and the basics of how much our rent or loan payments are but all the little things can escape us. Where did it all go? So the step before making a budget is tracking your finance. For one month, write down everything you spend money on. This has become even easier with tools like MINT that track the spending for you. This is an important step because otherwise, we want to set ourselves up for success. If we make an unrealistic budget it can be very discouraging. If you have a big grocery budget or spend a lot of money on gas, that’s a-ok. Just factor that into the ballpark and then over time we can identify the ‘offenders’ and reduce spending in a few categories.

You are not alone. More than XX% of people do not know where their money goes every month. All strategies vary. Some people only use cash as a way to check themselves, taking out their budget at the beginning of the week and spending accordingly. Other people only keep as much money in their checking account as they’d like to spend. My strategy is that I write every single thing down in a spreadsheet. And I have for more than five years now. Every taxi ride, cup of coffee, plane ticket, booklet of forever stamps are included in a neat personalized Excel spreadsheet.

I tried to use the online tools but found it didn’t quite cater to the categories I was interested in tracking. You may find that you have a unique monthly payment that you want to have for its own line-item or, like me, a category that is almost entirely avoidable (parking tickets!) that I want to put in red to remind myself of. Here are my categories.




Pretty self-explanatory.


Generally stays in the same ballpark monthly. Fixed cost.
Groceries: Broken down into two categories – groceries and personal care products (aka CVS trips for shampoo, lotion etc.). Variable cost.


Eating out- Personal: This category is just out it sounds. It  is exclusively for eating out by myself. It includes the occasional morning coffee, lunch during the work week, afternoon snacks, or other food purchases. Variable cost.


Entertainment (Eating out/Other) Split into two categories – eating out and other. Eating out is brunch, dinner or drinks with friends as a social activity. Other, as you’d imagine, is non-food activities, such as tickets for movies, museum or comedy shows, attending a seminar with a friend, or other activities.  Variable cost.
Transportation (Transport/La Kia) Gas, bus fare, ride-sharing or taxis. Car insurance (bundled with home owners insurance) gets it’s own line.
Shopping/Miscellaneous Any non-grocery store or CVS purchases such as furniture, books, stamps, clothing, gifts or other expenses.  This category fluctuates more than other variable cost.
Phone I am on a joint plan with my mom. I receive a partial reimbursement from work and pay my mom the difference.
Medical This line item is fortunately very low, but since it is unique and necessary it gets its own line. Co-pays and other expenses sit here.
Charity I make a small monthly contribution to a couple local groups, and occasionally make one-time gifts to other causes.
Memberships/Annual Fees This is a good way to evaluate whether I’m using the products and/or services I’m paying for. Amazon Prime, Costco and my annual credit card fee are a few examples.
Gym Quitting my gym membership and using class pass last year saved me $400.
Netflix I pay for a monthly Netflix subscription and share with family members.
Student Loans A biggie for me. Can’t wait until they are D.O.N.E! (3 more years)
Vacation A variable cost, of course, but I put a monthly amount in my budget in the hopes that it will balance out over the course of the year to an average of my monthly budget.


Salary I have a full-time 9-5 job that provides two paychecks a month
Other income This is a small but mighty category that thrills me. It includes small windfalls from selling something on Craigslist or at a yard sale, attending a focus group or other small amounts.


All in all, this system has worked for me. It accounts for my typical expenses in a way that meaningfully captures the way I lead my life, and has enough detail to show any pitfalls, trends, or outliers. I also add notes to outliers – for instance if I bought an unusually large amount of groceries because I was hosting a dinner party, or for categories with wide fluctuation such as the shopping category which has larger purchases such as a new rug or bar stools. What categories do you use when you budget? Share your comments or questions in the comment box below.

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