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Budget Categories

Master A Budget Series: Budget Categories and Percentages

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Welcome to Day 5 of the Master A Budget Series! Yesterday, we talked about Income and Expenses; today, you will learn about  Budget Categories and Percentages.

Let’s dive in.

Now that you know about your income and expenses, you might be wondering what budget categories are you going to use. Also, how much of your total budget goes to each group.

Don’t worry; I got you.

Budget Percentage

If you search on the internet about budget percentages, you will see that most of the results point to Dave Ramsey’s recommended budget percentages.

I, myself use Dave’s principles but I tweaked it a little to fit my family’s financial dynamics.

Dave’s Recommended Budget Percentages

  • Saving: 10%
  • Giving: 10%
  • Food: 10-15%
  • Utilities: 5-10%
  • Housing: 25%
  • Transportation: 10%
  • Health: 5-10%
  • Insurance: 10-25%
  • Recreation: 5-10%
  • Personal Spending: 5-10%
  • Miscellaneous: 5-10%

It’s good to include enough detail on your budget to have a grasp on things, however splitting your expenses into a bunch of categories will probably only frustrate you.

Moreover, it will require a lot more patience to use the above recommendations, especially for someone who is just learning how to budget. 

50/20/30 Rule

Here is a simpler alternative;

50% to Needs

Half of your income will go to areas that you cannot live without and that includes housing, food, transportation, utilities, and healthcare.

20% to Savings and Debt

The 20% of your income will be spent on funding your emergency fund, retirement, student loan payment, personal loans, and credit card payment.

30% to Wants

The 30% of your income will be spent on the things you want to do but you can live without, otherwise known as fun money. This includes vacations, dining out, entertainment, shopping trips, and other luxuries.

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Both of these budget percentages have their advantages and disadvantages. Consequently, they are not for everyone.

You still need to tweak them to fit your unique financial situation. Use them only as a guide. For example, if your financial goal is debt freedom, then you might focus more on paying off your debt rather than saving for a vacation.

You see, everyone’s financial situation is unique but the most important thing is to focus on your goal. If you keep your eye on the prize, then you will know how to perfect your budget.

Budget Categories

Let’s break down your expenses into budget categories. Although it’s good to include enough details on your categories, splitting it into dozens of little categories will probably be too tedious. 

Try to make your categories fairly general – “entertainment,” for example, is a more general category than “computer games, movies music, and DVDs” listed as separate categories. 

Here are the Budget Categories that you can include in your budget. Not all of them are applicable to you so only pick the ones that will work for your family.

I usually refer to my budget categories when I was doing the cash envelope budget system.


  • Net Income/Paycheck
  • Extra Income
  • Bonus/Refund



  • Rent/Mortgage
  • Renters/Homeowners Insurance
  • Property Tax
  • HOA  Fees
  • Home Maintenance
  • Home Improvements
  • Furniture/Décor
  • Household Items
  • Cleaning Supplies
  • Lawn & Garden
  • Security System
  • Cleaning Service


  • Electric
  • Gas
  • Water
  • Sewer
  • Trash


  • Car Payment
  • Insurance
  • Car Maintenance
  • Fuel


  • Grocery
  • Restaurant
  • Warehouse Membership


  • Phone
  • Internet
  • Cable
  • Streaming Devices
  • Subscription
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  • Medical Expenses
  • Life Insurance
  • Gym Membership
  • Health Insurance

Personal Care

  • Clothing
  • Toiletries
  • Baby Items
  • Haircuts
  • Beauty


  • Food
  • Clothes
  • Accessories
  • Pet Insurance
  • Medical, Grooming
  • Boarding


  • Travel
  • Entertainment
  • Hobbies
  • Kid’s Activities
  • Holidays
  • Parties
  • Personal Spending Money


  • Charities
  • Church
  • Gifts


  • Emergency Fund
  • House Downpayment
  • Car Replacement
  • Retirement
  • College Fund


  • Credit Card
  • Student Loan
  • Personal Loan
  • IRS

There you have it!

Those are the budget categories and percentages that you can use to craft your budget. Remember, your financial situation is different from anybody else, so don’t be afraid to make adjustments so that it will align better with your financial goals.

What other categories have I missed?

Next up on the series is everything you need to know about Emergency Funds and Sinking Funds.

If you haven’t yet, download the Master A Budget Workbook to practice what you will learn from this series.

Budget Categories and Percentage

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