Creation of a monthly budget is one of the most basic steps you can take to manage your money and make sure you stay on track to meet your financial goals. To create a budget, however, you need to have an idea of ​​your monthly expenses. You also need to make sure that your expenses don’t exceed your monthly income so that you can pay all of your bills and save money as well.

This list highlights some of the most common monthly expenses to factor into your budget:

1. Housing

Your housing expenses are probably your biggest budget item. This includes your monthly mortgage or your rent depending on whether you own or rent your home. It also includes all other additional costs that you have to pay to maintain and use your home. If you own your home, for example, you will have to pay your property taxes if you live in a state that has a property tax. Your property tax is probably frozen as part of the payment for your house, so you shouldn’t include it as an additional amount if you are already recording the full amount in your mortgage payment.

You’ll also have to pay for home maintenance, like plumbing repairs, landscaping, gutter cleaning, and an occasional re-coat of paint. You will need to estimate your maintenance costs to put them into a budget, as these are probably not fixed recurring amounts each month.

If you’re renting, you’re probably not responsible for any maintenance, repairs, or property taxes, so you won’t need to include a separate amount for it. It is therefore sufficient to include the amount of the rent.

Since housing is such a big part of your budget, it is important to manage it and not occupy more units than you can afford.

2. Food

Your monthly food expenses include everything you spend on eating. Whether it’s a home cooked meal, a pizza delivery, or a premium meal. Again, you may need to estimate your month-to-month food expenses. One way to do this is to simply average your food expenses over the past year.

Fortunately, you can control your food expenses to a great extent. If you need to cut your budget, food is probably a good place to start. Cutting back on takeout and limiting how often you eat out at your favorite restaurants can help you spend less money and stay on budget.

3. Transport

Transportation costs include everything you spend on the trip. This includes the monthly payment for your car, whether you lease or have a loan on a vehicle. It also includes insurance for your vehicle. If you use public transport to get to work or just to get around town, that will also be included here.

Remember to include any small additional expenses related to transportation, such as parking fees or routine maintenance like oil changes or new tires. It may be a good idea to periodically include them as part of the total cost in your budget instead of including a portion of the expenses each month, as this is how you will pay them.

4. Child care and pet care

If you have kids or pets, you probably can’t take care of them on your own all the time. You may need to pay to have someone else take care of them so you can run errands or go to work or school. If your child attends regular daycare, then you must include the monthly tuition fees for him or her. If this is the occasional babysitter you hire so that you can dine out or visit friends, then you’ll want to estimate your monthly cost.

For pets, don’t forget vet bills and food.

5. Cell phone

Your cell phone bill is another standard monthly expense. This one is simple to follow because you receive a monthly bill.

6. Health insurance

Health insurance costs will vary from person to person, but your premium will usually only change once a year, so you can budget based on a consistent monthly expense. If you have taken out health insurance with your employer, your employer pays part of your premium. You only want to include the portion you pay in your budget since that’s all you’re responsible for.

Keep in mind that you may have co-payments or deductibles that are not included in your premium. You may want to set aside an amount each month to cover these additional expenses, so that you are not at a dead end when you have to pay an unexpected visit to a doctor’s office or to the emergency room. A health savings account is a good way to do it.

7. Debt

The monthly debt expense is not the debt balance itself, but the payment on the debt balance. These can be payments on anything, like credit cards or a personal bank loan.

Depending on how you categorize your expenses, you can include car or house payments here, but make sure you don’t double-count them if you include them as transportation or lodging.

8. Savings

Saving should be an integral part of any budget, so including a monthly savings “expense” is a good way to make sure you don’t forget to put some money aside. Saving doesn’t have to be an afterthought. Include some of the money you have left over after paying for other expenses in your budget. According to 50/30/20 budget rule, you need to set aside 20% of your income for savings.

Different types of savings compartments can be money that you put in a savings account, emergency fund, or retirement account.

9. Entertainment

Entertainment expenses are tied to anything you do for fun. It could be the money you spend on leisure, movie nights, travel, or attending sporting events.

It’s easy to dismiss entertainment as a monthly expense. But if you don’t factor these discretionary spending into your budget, you can easily start overspending here.

How to create a budget

AT create a budget, start by listing all of your monthly expenses, including some additional expenses not listed above.

Then list your income on your written budget so you can compare your expenses to your income. Make sure your expenses are comfortably less than your income. You want to leave adequate wiggle room in your budget so that unexpected extra expenses don’t leave you wondering if you’ll be able to afford something you need or make your mortgage payment.

Once your written budget is complete, you should track your actual expenses each month and compare them to your budgeted expenses. It’s a great way to find out if you’re really spending the money where you think you are. When you discover variances between your budgeted expenses and your actual expenses, you need to either adjust your budget or your expenses. Completing this process helps you manage your finances and reveals opportunities to make simple but impactful improvements.

At the end of the line

Creating a budget is an invaluable tool in keeping your finances in order. Knowing your monthly expenses is essential to stick to a budget that accurately reflects your financial situation.

Take the time to write down your budget and monthly expenses to stay on track.

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