Category Archives: Finances

All about money, budgets, taxes and what you should know in order to manage your own

Types of Expenses to Include in a Budget

A budget is made of up income and expenses to help someone figure out where their money is going and how much they have left.  Expenses are the payments that someone makes for things.  Expenses make up the side of the budget that outlines where your money goes.  Having a good grasp of your expenses is often the most difficult part of maintaining a budget and not understanding is a common reason for poor money management.

It is very important to know your expenses and the number one way to really understand them is to track them.  Not for just a month or two.  A continual tracking of expenses keeps your budget in check as well as allows you to make changes to it over time as you see categories needing an increase or decrease in how much you have allotted for spending.

On your budget, you will list expense categories and those categories will be given an amount that you plan to spend for that category in the time frame of your budget.  For example, how much do you plan to spend on groceries each month?  Or how much do you plan to spend on gas every two weeks?  The time frame of your budget is up to you and the expense categories need to fit your life’s needs.

Let’s looks at some budget expense categories

Expenses to Include on a Budget


Gas,  Insurance, Repairs, Regular Maintenance


Mortgage or Rent, Insurance, Utilities, Repairs, Maintenance, Regular fees, Taxes, Extra Principle, Homeowners Association


Groceries, Dining


Medical Bills, Insurance, HSA/HRA Contributions, Prescriptions, Gym Memberships, Health Classes


Cell Phone, Cable, Internet, Home Phone, Storage Units,


Clothes, Non-essentials, Household Items

What Other Expenses to Include?

The categories above may not apply to you, or certain expenses within them may be irrelevant.  The point is to define a few major categories and figure out if you want to break them down.  You may not need to break them down though.  You can easily take the food category and just combine groceries and dining out for example if you do not feel a need to track them separately.

Some may want to include payroll deductions such as insurance fees taken out by your employer, 401K contributions and Health Savings.  Some would rather just account for what they pay out of pocket with the money they actually are paid by their employer.  It’s all about what makes the most sense to each individual creating their budget.

You may have other things that need their own category such as a boat or a beach house.  Maybe you want a category for your child expenses.  Maybe a category for your work expenses.  A budget must be very personal for it to be successful.  It needs to match your actual spending and financial situation.

The most important thing to remember is no matter how little or much income you earn, a budget is important to effectively manage your money.  Even if it is just the old envelop system of portioning cash to different envelopes each time you are paid, it is still helpful.  It does not need to be fancy spread sheets and calculations.

Types of Income to Include in a Budget

What Kinds of Income to Include in a Budget?

We are continuing our teaching on budgeting.  We’ve already identified the parts that are to be included on a budget, mainly income and expenses.  In this lesson we are going to continue discussing the topic of how to create a budget, focusing on what is income and what kinds of income to include in a budget.

Income, for our purposes, will be anything that adds to your liquid cash assets on a regular basis.  Income is not equity, nor interest accumulated but not yet available, such as by a CD account or money paid off on your mortgage.  Liquid cash assets is money that you have available to spend at any time you desire.  A CD is not a liquid asset because you must wait until a certain period of time before having access to the funds that were put in and the interest that has accrued.  If you are paid out your interest from a CD on a regular basis, even though you can’t withdraw the original funds, then the interest would be considered income.

What are types of incomes to consider?

Payroll Income

The payments made to you by an employer for your work.  You can either use Net income here (how much is actually given to you after all deductions) or Gross and count all of the deductions as expenses.  You can decide what is best for your budget.

Business Income

Do you do any side work?  Rent out something you own? This would be considered business income and can be included on a personal budget if it doesn’t make it too complicated.  You may want to keep a separate budget for your business and just include the bottom line on your personal budget.

Interest Income

Amounts paid to you that are available during the budget period.  This would be interest on savings and checking accounts, CD’s that pay interest instead of accumulate, or other interest that is paid to you.

Child Support or Alimony

Do you receive payments from someone else as a result of a family settlement?  This is included in income.


Any other stipends paid to you on a monthly basis, such as living expenses of someone living with you, lottery winnings paid regularly, etc.  Anything else that is paid on a regular basis.

One Offs

If you receive irregular income of some sort during a budget period, you can include that as income too, but be careful of how it may tie out your numbers at the end.  You may just want to keep it separate for the sake of tracking the purchases made with it separately.

Those are the basics.  If you are following this and working towards building your own budget, then start thinking about what various types of income you have and would like to include on a personal budget.

Next will be expenses.


What is a Budget

For some, managing their money is a natural and everyday process that just makes sense.  But there are many people who just don’t understand what it takes to efficiently plan and utilize the financial resources they have.  If you understand what a budget is, but have no idea how to create one or why you even need one, then this is the place to be.

what a budget is:

  • A plan
  • Categories of things you buy (expenses) and money you receive (income)
  • A way to balance income and expenses
  • A tool

What a budget is not

  • A bank account
  • A way to lose control over your money
  • An annoyance

There is one thing to know right away with a budget.  A budget should not limit you to the point where it becomes a nuisance .  The reason for creating a budget is to free your money up so that you can use it how you really want to.  Trying to save for a car?  A budget will help you plan and keep track of how close you are and how long it will take.

A budget can look many different ways, but every budget usually contains a few elements.  These can appear differently or be given different weighting based on the individual.  Let’s review these elements:

Time Frame

You can budget for the week, the month, the quarter, even the year.  You do not have to stick to any time frame, but choosing the one that is best for you is beneficial to giving you the best picture of where your finances are at.  The time frame most likely depends on how often you pay certain bills or how often you are paid.


You need to know all the sources of money coming to you.  Whether pay checks, social security, pensions or any other way you make money.  These should be kept track of in a budget.


The biggest reason people fail to efficiently handle money is because they have no idea where it goes.  On your budget you will need to create categories for the things you spend money on such as auto expenses, clothes, and food.  Tracking all of these purchases gives you a picture of where you money is going.

Those are main elements.  We will get into more on these elements in future posts, but for fun, here is a sample budget.

Sample Monthly Budget


Payroll: $2300

Lawn Cutting: $200


Food: $200

Gas: $150

Health Insurance: $175

Income Taxes: $650

Auto Insurance: $65

Cell Phone: $60

Student Loan Payments: $600

Total After Expenses: $600

Savings: $400

Total non-discretionary Funds Available: $200

By looking at the sample monthly budget, we know there is $200 per month to spend on extra things.  That is, unless there is an overspend in one of the categories.  By a simple list like this, you can easily figure out where your money will go and how much extra you will have.  We will get into more detailed budgeting in the future.