The Complete and Only Monthly Budgeting Checklist You’ll Ever Need

by Josh Biggs in Finance on 6th September 2021

Are you trying to get your finances under control? Financial planning isn’t easy for the average person, but not everyone has the money to invest in a professional for help. If you’re doing it alone, you need to figure out your budget. 

Monthly budgeting isn’t hard once you have a basic list to go by. You’re going to want to consider your wants, needs, and future savings. These categories are broken into 50%30%/20% of your budget. 

Keep reading for a quick guide so you can start making your budget today.

Start With Needs

Whenever you’re budgeting, you need to take care of your needs first. Making a list of wants and needs isn’t easy, but it will help you keep your household afloat. You want about 50% of your spending to be made up of needs (though if you use less, that’s okay). 

Needs vary by household, but here are a few things that you should budget for first. 

Bills

Bills come first, always. You want to make sure that you’re not going to lose your utilities or your home. 

Most people have either rent or mortgage payments. This is often the largest monthly expense, so note this down first. If you have HOA fees, add them to the housing fees. 

You’re going to need to factor in utility bills if you pay them separately (including internet). Don’t forget your phone bill. While internet and cell phone service may seem like “wants,” most people need them to work. 

We’re also going to include insurance in this section. Make sure that you can pay the bills for your health insurance, car insurance, and any other types of insurance that you have.

Food

Food comes next. When you’re considering “needs,” you’re including food that will cover all of your nutritional dietary needs. The food in this part of your budget is basic.

For example, you want to get all of your protein, fruits, vegetables, and grains in this section. essentials don’t have to be brand-name (we’ll discuss this later). 

Medication and Healthcare

If someone in your household takes medication, you need to factor this into your budget. Most people rely on their prescription medications. Unfortunately, medication is often one of the first things to go when people aren’t able to afford their entire budget. 

Make sure that everyone can visit the doctor and dentist before you start moving onto your other categories. 

Clothing and Essentials

Items like clothing and other household essentials don’t tend to be monthly purchases unless you have a young child in the house or a large household, but you should still factor them in. 

Essential clothing is clothing that needs to be replaced or bought. Like with food, this clothing is basic. For example, if your child has grown out of their clothes and they need a larger size. 

Essentials include things like toiletries and cleaning supplies. Make sure that you have toilet tissue, household cleaners, toothpaste, toothbrushes, and anything else that you need to use every day. 

Transportation

Transportation costs are crucial. Whether you pay for gas, car insurance, car payments, or even public transportation, you need to make sure that you can get from point A to point B. 

Most people need to commute to work or school. You also need to commute for groceries and other needs. Transportation is easy to forget in your budget, but don’t make that mistake. 

Wants and Extras

After you have your needs squared away, start looking into your wants. Wants should make up 30% of your spending or less. While we’ll talk about saving next, if you don’t spend the entire 30%, consider adding it to a “future wants” savings account so you can have larger things later (or shop for holidays and birthdays). 

Here are a few things that you might put into the “wants” category. 

Travel

If you and your household love to go on vacations or even brief day trips, make sure that you factor it into your budget. This is a great category for the “future wants” savings account as most people don’t travel or go on large trips every month. 

Consider expenses related to lodging, transportation, and purchases while you’re on the trip. Many people think that they can’t afford to travel when they actually can if they budget the right way.

Outings

Have you been avoiding giving yourself any fun activities or outings because of your budget? It’s responsible to avoid eating out every day, but that doesn’t mean that you have to avoid it altogether.

The average American eats 4.2 meals per week that they didn’t prepare themselves. This is too much, but there’s nothing wrong with getting food or coffee from a restaurant or café a few times per month as long as you fit it into your budget. 

This category can also include delivery food even though you’re eating at home.

If you’ve been wanting to go on a date, out for an event, to a spa, or anything else outside of the home that costs money, put it into this category. You deserve it!

“Luxury Necessities” 

This might seem like a strange term, but “luxury necessities” are a part of most people’s budgets. 

When we say luxury necessities, we mean items that you could buy for a lower price if you bought the most basic version of it. For example, while your food “basics” are all staples (likely without brand names), your luxury food items include treats and brand-name goods. You don’t need these things to have a good meal, but they’re nice to have. 

Nice clothes and toiletries are also in this category. You don’t need a fancy new coat or expensive shampoo, but these things are nice to have. Consider this a category for “upgrading” your necessities. 

Other

There are too many things to list in the “wants” category. Everyone wants different things and has a different amount of space in their budget. 

You may include things like gifts, cosmetic items, jewelry, gym memberships, streaming services, and anything else that you could do without even if you don’t want to. 

Savings and More

20% of your budget should go into savings and other long-term things. It’s best if you can put more money into this category, but don’t worry too much about it if not. Your needs always come first.

You want to set yourself up for a less stressful future. Here are a few categories to focus on. 

Investments

Over half of Americans don’t invest their money. Most people think that they don’t have enough money to start with, but this isn’t true. 

Most people aren’t able to invest large sums, at least not right away. Investments, however, are important if you want to grow your wealth over time, even if it’s a slow process.

Start by investing a few dollars every week into reliable stocks. Consider this a savings account. If you don’t want to do it alone, ask for advice from a financial advisor. 

Savings Accounts

Speaking of savings, you want to have a savings account (or several) for your future and potential emergencies. 

Look for accounts that offer higher interest rates. One of the problems with a standard savings account versus a CD, a bond, or an investment is that you won’t keep up with inflation (meaning that your money has less value over time). 

This doesn’t mean that you shouldn’t have these accounts. It just means that you should try to diversify. 

Retirement accounts also fit into this category. Start putting money toward retirement while you’re still young if you can. 

Debt

The best thing that you can do for your financial health is to pay off all of your debts and loans as soon as you’re capable of doing so.

If you use a credit card, pay it off every month. Building credit will make future purchases easier and more affordable. Make sure that you don’t have any outstanding debts that can harm your credit.

You should also be attentive to your student loans (if you have them). Put a bit of money every month into your loans so you can chip away at them. 

If you’re struggling to take care of your debt and it’s hard to keep track, consider debt consolidation with a company like Plenti. This will make the process easier and quicker so you can stay on track with your payments. 

Use This Monthly Budgeting Checklist for Financial Freedom

Money management isn’t always easy, especially if no one has ever trained you to have good financial health. By making sure that your monthly budgeting is on point, you’ll have an easier time tracking your monthly expenses so you can allocate your funds in a smart way.

Take control of your money through smart budgeting tactics. 

For more helpful articles all about finances and more, visit the rest of our site. 

Categories: Finance