Every Budget Should Have These 4 Categories It’s Really Important

Every Budget Should Have These 4 Categories It's Really Important
Every Budget Should Have These 4 Categories It's Really Important

Introduction Of Every Budget Should Have These 4 Categories It’s Important

Every Budget Should Have These 4 Categories It’s Important. We’re gonna be talking about the budget today because my budget was the number one tool that helped me pay off 35 000 in student loan debt on a 37 000 salary in just under two and a half years and the way that I created my budget and I think is essential no matter how you have your set up whether you are using a journal an app or a budget spreadsheet or even my budget toolkit which you know it has these categories then.

The first thing is the fixed category

It has to have these four things the first thing is the fixed category so the fixed category inside of your budget should include all expenses that you know are going to happen every single month these are generally reoccurring expenses and generally they are at the same price so think of rent or mortgage payment you know that’s going to happen every single month you know how much it’s going to cost and so that goes into your fixed category likewise for your cell phone bill and utilities and I also include groceries in the fixed category because.

We know we are going to be buying food every single month and typically at least for my experience groceries are around the same amount of money every single month the second category that you need is the fun category so the fun category encompasses all of your budgeted items that are nice to have they’re funny that’s exactly what a fun category is and I think every budget should include a fun category even while you’re still in debt that’s right I had a fun category while I was paying off debt because

If you don’t allow yourself those small wins and rewards throughout the month or when you hit a milestone then you get burnt out very quickly and so what you can include in your fun category are things like restaurants going out shopping clothing entertainment golf whatever you want it goes into the fun category just be sure that the fun category does not overtake your budget and distracts you from your bigger financial goals such as getting out of debt the third category is the budget category and I remember having this in my budget and people like she must like chocolate yes.

The budget category is not for chocolate and sweet things

I do like chocolate a lot but the budget category is not for chocolate and sweet things it’s actually for anything miscellaneous where you’re like oh budget I forgot about this or budget I need to figure out how to pay for this expense your budget category acts as a buffer so it’s a small amount of money that you set aside in your budget in case you go over budget in a different category or you purchase something and it just doesn’t seem to fit seems like an odd miscellaneous one-off purchase that you’ve made you’re not sure where to put that expense.

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So I’ll give you an example of when I bought tums one month and I don’t normally buy toms it doesn’t come out of my groceries budget it doesn’t come out of my shopping budget because I’m like how do you shop for toms you just buy it. After all, you need it and so it came out of my budget category because it was miscellaneous for me now you could also use your budget money if you went overboard like let’s say you had birthdays come up that you forgot about you can pull from your miscellaneous budget category to help supplement your gifts budget and the fourth major category.

That every budget should have is your future category I love the future category because this encompasses all of your savings goals that you are budgeting for every single month now in my future category I include things like a vacation fund a down payment fund a second car fund a baby fund all of those things that you know you want to set aside for future spending and you have it all listed out inside of your budget so you know that you are making progress every single month, okay so I like to call this the four f’s budget so.

Making extra payments to pay off

We have your fixed fun budget and future these are your major categories inside of your budget if you don’t like getting granular with your budget and listing out every single line item you just stick to these four major categories and start budgeting your income into those four sections it makes it easy and you make sure that you are encompassing all of your needs and expenses now one thing to note is you’re probably asking where does debt fit into the four f’s categories well you could include them in fixed.

Because those debt payments generally are fixed payments that you know you’re going to be spending every single month however if you are on your debt-free journey you most likely are making extra payments to pay off that debt even faster and so if you’re using my budget toolkit which is a free google spreadsheet then you will see debt has its category above the rest of your budget because it should be top of mind and it should have its section so you can track exactly how much money you are putting towards your debt.

How much interest your minimum payments

How much interest your minimum payments and your total balance that’s left so no matter how you budget these four categories are going to keep things organized and simplified for your needs if you want to go granular like me where i’m listing out more line items underneath those major categories you can absolutely do that or you can just keep it simple.

Whatever you want to do is all right with me as long as it’s meeting your financial goals don’t forget that you can use the 4f’s budget and the 4f categories inside of the budget toolkit which is linked below for free this will be always a free budget spreadsheet for the debt free millennials community to help you crush that debt and then also live payment free.