Budget Categories

Budget forms typically have the basics – housing, food, electricity, gas for the car, fun spending, etc.  But what about home office supplies?  Getting your hair cut and styled?  Stamps and Christmas cards for your holiday mailing?  Do you combine groceries and toiletries or not?  How specific do you want to be?  A separate envelope for an Amazon Prime subscription?

A more thorough list of expenses – and thus, possible envelopes – would have really helped Ben and I brainstorm when we started budgeting!  Obviously, you will have slightly different ones tailored to your life.  If you are just starting out, don’t feel overwhelmed!  Remember, this comes after three and a half YEARS of monthly budgeting!  It’s definitely been tweaked and refined a few times and is what works for us at this stage of our lives.

Now, especially for the crazed-budget-nerds among us – ‘a place for everything, and everything in it’s place’ solves many category quandaries… You’re welcome. 🙂

Ben & Naomi’s Budget Categories

Giving: Tithe

Giving: Generosity

This is a fun envelope we added that is directly related by a percentage (above and beyond our tithe) from our creative income (anything we make extra above Ben’s normal work) – selling on eBay, garage sale buying and reselling, etc.  Basically the only rule is that it has to be spent on others!  One of our favorite uses is taking people out to eat.

Savings: House

Big ticket items like a new roof, an addition or adding a garage.  Ever thought of saving to buy a house?

Savings: Baby Fund

As soon as we find out I’m pregnant, we stop all other saving and fill this envelope so we have starter $ for doctor bills and pregnancy-related expenses.  Once it hits the goal amount we resume saving as normal and then after baby is born and all are healthy we take what’s left and redistribute to the other savings where it “would” have gone.  When I’m not expecting, it sits empty.

Savings: Emergency Fund

3-6 months worth of expenses and we don’t add to it if the full amount is there.

Savings: Retirement

Savings: Vehicle Replacement

Right now we have a decent vehicle that fits us all and is not falling to pieces so this envelope is empty.  When we had our old Honda Civic, we knew we would need another vehicle in the future so we started adding $ to this envelope until we had saved the amount we wanted to spend on our next car.

Savings: Vacation

Just like the car and baby envelope, we only start saving when we have something in mind.  Back when I worked, we saved for 1.5 years in this envelope so we could go to China!

Home: Rent/Mortgage

Home: Repairs – paint, new carpet, little fixes, etc.  Also appliances and furniture.

Home: Miscellaneous – yes, there will be something you didn’t have a category for!

Home: Office Supplies – printer ink, anyone?  Paper?  Tape?  Stamps?

Home: Phones & Electronics

Utilities: Electric

Utilities: Propane – this is our heat; others may have city water/garbage…

Food: Groceries & Toiletries

With the way we separate everything else out, it’s a little odd that we combine these… I guess since we always do the shopping together at the same place, it makes sense.  And we spend minimal on toilet paper, make-up, and shampoo…

Food: Eating Out

Transportation: Fuel

Transportation: Repairs, Tires, Registration

Most people think to budget for gas, but you don’t want to suddenly realize your car needs new tires @ $80 a pop.  There’s also annual registration and/or plates.  And no matter how new and ‘reliable’ the car, there WILL be repairs!

Clothing: [We each have an individual clothing envelope]

Health: Dental/Optometry/Chiropractic/Other

This is for all health-related expenses that are out of our pocket, and also our deductible.

Insurance: Health/Healthcare Sharing in our case

Financial: eBay

This envelope is like a mini bank account that all eBay income is recorded in and then shipping expenses paid out of, so it’s simple to track actual income.

Financial: Business Ideas

Ditto above for all other types of creative income.  This is where the sign-up and annual fees would come out of if you are a distributor for essential oils, cleaning products, or fitness companies, if you are into that kind of thing.

Financial: Miscellaneous – some bill or fee you weren’t expecting.

Personal: Recreation/Fun

Movie tickets, amusement parks, spending $$ on trips for trinkets, etc.  Can also be used for food on special occasions.

Personal: Ben’s Spending

Personal: Naomi’s Spending

Our little bit of pocket money to spend on whatever we want!  These are very important envelopes so you don’t blow the budget!

Personal: Self Improvement – books, seminars (educational things)

Baby: Diapers & Accessories

We budget for (generic) disposable diapers.  A good way to track the savings (or not?) of cloth diapering, and whatever we don’t spend because I cloth diaper, we can use for baby accessories!

Baby: Sitter – in other words, an investment in your marriage!

Gifts: Friends & Family

Gifts: Weddings

This covers wedding gifts and also helps with travel, tux rental, lodging, and other expenses when in/a part of or even just attending weddings.  At this age in our lives a lot of friends are getting married and the expenses add up quick!  We KNOW it’s going to happen… we just don’t know WHEN.  If we prepare, there’s no panic session when the invites come in the mail.

Annual Envelope Categories

Often, it is slightly cheaper to to pay premiums and bills annually (always check though).  We are all for saving money, and especially where it’s easy to do so!  If you are currently living paycheck to paycheck, it will take a little working up to it to get to this point.

Financial: Budget Software

We use digital envelopes that sync with our smart phones.  BIG SURPRISING REVEAL:  We have never done REAL paper envelopes with cash inside!  I know, right?!  This works great as long as you are disciplined that when the money’s “gone” it’s GONE, even if there is still money in your bank account (it’s “in” other envelopes, remember?).  For us, the several $ a month has been worth it to help us manage God’s money!  There is now a free one though – ask me about it!

Financial: Taxes

B.F. (Before Kids) there was one year we had to pay in some instead of reimbursements.  So we save for it, just in case.

Financial: [Work] License – continuing education, work in your field license renewal, etc.

Insurance: ID Theft Protection – important, but often overlooked!

Insurance: Save to Share (higher cap for our health care sharing)

Insurance: Disability

Insurance: Life [separate envelopes for Ben and I]

Insurance: Renter’s/Homeowner’s

Insurance: Auto

Home: Domain Renewal – for websites like this one!  

Home: Amazon Prime

Gifts: Christmas

Yup, it comes every year!  So we save for it the 11 other months.  This covers gifts for others and travel.

Gifts: Family Mailings

We like to send a Christmas letter and family picture!  It’s not cheap either!  A couple hundred dollars just in stamps alone, and then getting the card/picture printed, special paper, etc.

Gifts: [for each person in our immediate family]

We have chosen an amount that is the max to spend on each person annually.  This includes Christmas AND birthdays.

And there you have it, folks!  All 54 envelopes that we have currently!  You can see why we do digital rather than paper ones… LOL!  In case you have a few different expenses than I listed above, here are a few more possible envelope categories for the average family:

Annual zoo, club, pool, gym or museum memberships

Homeowner’s Association fees

Home educating curriculum/co-op fees

Monthly magazine/other subscriptions

Payments on debt – student loans, credit cards, etc.

Pet food & care

Cable TV

Home phone/internet line

Hairdresser or dry cleaning

And in case you were wondering, here are answers to some questions that may be bouncing around in your head about now…

Yes, we do “rollover” envelopes.  {That means, if we don’t spend it all in one month it ‘rolls over’ and adds to the amount the next month – necessary for bigger purchases like pantry restocking in the grocery envelope or filling our natural gas tank for heating.  It gets filled 2-3 times per year, but we set $$ aside every month so when the bill comes for $CRAZY BIG BUCKS$ we don’t have to freak out; the money is there.}

No, we do not put money in ALL these envelopes every time!  Uh… I wish we had an income like that??!  As I noted above, a few of them are empty, that we may use in the future.  Some of them got a little built up and we decided we didn’t need to add more cause we aren’t spending as much in that category right now.  Or, maybe it shows you are neglecting something important.  {Hint: When the babysitter envelope is stuffed and overflowing, you need to go on a DWOK (date without kids) ASAP!}  Keep in mind that we add a teensy, tiny amount to some of them (see next paragraph) and a lot are just $5.  A little bit here and a little bit there does add up!  Goodness, no!  I feel like I need to repeat myself so this many envelopes doesn’t seem not possible.  We DO NOT add $$ to each of these envelopes every month!

You can choose to fund everything monthly by taking the annual amount needed divided by 12 OR fund a different category each month.  For example, budget [example amount of $200] to life insurance in Jan., car insurance in Feb., taxes in Mar., Wedding gifts in April, renter’s insurance in May, all the little things like domains in June, etc.  We find it’s just easier to list them all out and divide the amount because then we remember throughout the year what all we are subscribed to and paying for.  Sometimes the divided out amount is pretty small, like $1.67 per month in one envelope!  We like it because we can be more exact this way.

No, you DO NOT need to have this many envelopes!  A successful budget is one where every dollar of income is assigned a mission.  You can have a successful budget with 10 envelopes!  For a college student a basic budget may only have 5!  It depends more on your personality for how detailed you want to get.  (You could have one envelope for ‘Utilities’ and it could have the $$ necessary for water, electricity, heat, garbage and internet.  Just be on the alert that when the electricity bill is unexpectedly higher, all seems fine… until the internet bill comes due and there’s not enough left in the envelope.  That’s where it went.)  Before kids we had quite a few less categories to think about!

Subject to change.  Like any good budget, it is fluid rather than set in stone, and envelope categories will come and go as needed.

Do you budget?  I’d be really interested in how you divide the categories out.  Any other questions about how we do budget categories?  Feel free to ask in the comments or email me!  We want to be transparent about what we do so it can be helpful to others!