Six Figures Under

Personal Finance Made Public

  • About
    • Our Story of Paying Off Six Figures of Debt
    • We’re Debt Free!
    • Contact
    • Favorites
    • Guest Posting
  • FRUGAL LIVING
    • at HOME
    • FRUGAL FOOD
      • cooking from SCRATCH
      • growing & PRESERVING
      • Grocery Shoppping
      • other ways to SAVE on food
      • Quarantine Food Storage Challenge
    • with KIDS
    • SPENDING wisely
    • NO-SPEND month
    • ATTITUDE is everything
    • Holidays
  • FINANCES
    • Budgeting
    • Guide to Getting a Month Ahead Financially
    • Our Financial Situation
    • Personal Finance Made PUBLIC
    • Financial Safety Nets Series
  • DEBT
    • Smash Debt GUIDE
    • Getting STARTED
    • MOTIVATION
    • SPECIFIC Situations
    • Debt Smash-athon
    • Staying ON TRACK
    • OUR Repayment Updates
  • EARNING EXTRA
    • Start a BLOG
    • More on BLOGGING
    • Earning on ETSY Series
    • Earn Gift Cards with Swagbucks
    • AIRBNB Hosting
    • OTHER Ways to Earn Extra
  • Shop
You are here: Home / FRUGAL LIVING / Frugal Fresh Start CHALLENGE / Define Budget Categories for Periodic, Variable, and Fixed Monthly Expenses

Define Budget Categories for Periodic, Variable, and Fixed Monthly Expenses

January 8, 2020 by Stephanie 29 Comments

It’s time to address the B-word.  You knew this was coming sooner or later.   If “budget” is a bad word in your vocabulary, it’s time to fix that!

A budget doesn’t have to be depressing and restrictive– it can be exciting and freeing!  We actually love our budget!

It was exhilarating when we settled on our current process and knew we had something that would really help us manage our finances intentionally, instead of watching them as they went by.  We still look forward with excitement to our end-of-the-month budgeting date.

However, putting together a budget all at once can be intimidating, so we’ll do this one step a time.  Today we’ll start with setting up budget categories.  Budget categories need to be personalized to fit your family’s unique financial situation.

If you put some thought into tracking your expenses like we talked about last week, then you’ve probably already nailed down some good categories for your variable expenses.  Today we will build on those variable expenses and add fixed expenses and periodic expenses.

Variable Expenses

Variable expenses are the expenses that change from month-to-month.  Most of them don’t go away completely, but the amount we spend is never the same each month.  We are focusing on variable expenses in our expense tracking report to get a real picture of how we spend our money.

You can use as much or as little detail as you like.  The more detail you have, the clearer the picture of where your money is going, but the more work you’ll have splitting up those receipts from Target and Wal-mart.  For example, splitting your grocery purchases up by food group is probably overkill for general budgeting purposes.  On the other hand, lumping all of your online purchases into a “shopping” category isn’t going to give you enough information to make meaningful changes.  You’ll find a happy medium that works for you.

Here are some typical categories that you can adapt to your own situation.  Make your own rules about what expenses belong in what category.  If a new expense comes up that doesn’t fit well in your established categories you can add a new category (if it’s an expense that will likely recur) or make it fit into an established category (if it was an odd one-time expense).  Avoid catch-all categories like “shopping” and “miscellaneous” or use them very sparingly.

  • Groceries
  • Restaurants
  • Gas
  • Household
  • Baby/Kid Expenses
  • Entertainment
  • Gifts
  • Utilities (gas, electric)
  • Cell Phone (if plan varies by usage)

Fixed Monthly Expenses

Fixed expenses are the expenses that don’t change from month to month.  You know exactly how much those costs will be.  You also know the dates that these expenses will be due or will be automatically taken out of your checking account.

Here are some examples of fixed monthly expenses.  Some may not apply to you (or they may be periodic or variable rather than fixed monthly expenses) and there are likely other fixed monthly expenses that are not on this list.

  • Mortgage/Rent
  • Health Insurance
  • Car Insurance
  • Home Owners’ or Renter’s Insurance
  • Cable or other TV subscription
  • Phone
  • Cell Phone
  • HOA Fees
  • Debt Payments
  • Utilities (electric, trash, Internet)

Periodic Expenses

Since we are creating a monthly budget, periodic expenses are ones that come less often than monthly.  They could be expenses that come up annually or at some other interval.  Periodic expenses sometimes sneak up on us because they occur so infrequently that we don’t have them on our radar.

Once again, this isn’t an exhaustive list of possible periodic expenses.  Some of these expenses may be fixed monthly or variable expenses in your individual case.  Think hard to come up with all of your periodic expenses.

  • Life Insurance Premiums
  • Car Registration
  • Magazine Subscriptions
  • Car Insurance
  • Property Taxes
  • Club or Association Fees
  • Domain registration renewals
  • Tuition

Challenge–Day 6

Define categories for your budget.  To help with organization, divide your categories into categories, either like I did above (variable expenses, fixed monthly expenses, and periodic expenses) or in a different way, depending on your personal situation.

There is a spot in your workbook (get your workbook when you sign up for the challenge) where you can list the categories that you’ll be using in your budget.  We will use these categories tomorrow when we continue on with setting up a fresh budget!

  • What are some of your budget categories that I didn’t mention?
  • What are some of the periodic categories that get forgotten until they come up?

Filed Under: Frugal Fresh Start CHALLENGE, FRUGAL LIVING

« Overcome the Challenges of Cooking at Home
Setting Up Your Budget Using the YNAB Methodology »

Comments

  1. Lauren says

    February 7, 2016 at 10:23 am

    Christmas gift giving – gonna budget for it all year so that it’s not a stressful topic once it comes time to start shopping for everybody!

    Reply
  2. Mona says

    March 20, 2015 at 7:09 pm

    I am trying to get my budget set up and found this on pinterest. How can I find days all the days? It is all very exciting. Starting the budget at end of this month and trying to get things together. Right now anything and everything will help. 🙂

    Reply
  3. Stephanie says

    January 13, 2015 at 10:53 am

    Awesome! A seasonal one. Good thinking Jodi!

    Reply
  4. Jodi says

    January 12, 2015 at 7:15 pm

    I have a haircut category, which is periodic. I also have mowing to pay monthly, but only March thru October.

    Reply
  5. [email protected] says

    January 12, 2015 at 2:01 pm

    It’s the periodic expenses that kill you, whether they are irregular or unexpected. Travel costs is a big one for us. Surprise sibling weddings tend to throw a wrench in the budget…dealing with that one this month!

    Reply
    • Stephanie says

      January 13, 2015 at 10:51 am

      Travel can really get your budget! Fortunately there are probably a limited number of sibling weddings! 🙂 Have fun though! Better a wedding than a funeral!

      Reply
  6. [email protected] says

    January 12, 2015 at 1:43 pm

    These are good categories for a start — though like Nichole, I’ve moved to simplify my categories over time, reducing all kinds of food money into a single category, for example. I do have two “slush” categories; one, I’m free to spend every month for whatever reason (entertainment, a meal out with a friend, a fun-but-not-necessary purchase, gifts), and one is for necessary expenses that I haven’t planned for specifically (examples might include a professional expense I can’t get reimbursed, or clothing/shoes if I wear out something I already have.) I think it’s a good idea to expect your categories will change and adapt over the first six months or so as you figure out a balance between specific and simple/easy.

    Reply
    • Stephanie says

      January 13, 2015 at 10:47 am

      Yes! When you have a handle on your spending you can definitely simplify and do what works for you!

      Reply
  7. sarah says

    January 12, 2015 at 1:37 pm

    Don’t forget about the “giving” category! (This would include offerings to church and other times when asked for donations.)

    Since I started using YNAB almost 2 years ago, I now have all those variables contained…don’t forget about IRA fees, lockbox fees, etc.

    Reply
    • Stephanie says

      January 13, 2015 at 10:48 am

      Our giving categories are at the top of our budget, but I totally forgot them here! Thanks Sarah!

      Reply
  8. CherylJ says

    January 12, 2015 at 12:59 pm

    Now that our 3rd and youngest son is coming upon graduation, I wish I had created a category for educational during his freshman year, to include all the academic testing and study guides. As well as extra curriculum items that the school didn’t pay for.

    Reply
    • Stephanie says

      January 13, 2015 at 10:45 am

      Hindsight is 20/20, right!? 🙂

      Reply
  9. Sarah says

    January 12, 2015 at 11:59 am

    Zoo/Museum memberships
    Water park/theme park annual passes

    Reply
    • Stephanie says

      January 13, 2015 at 10:45 am

      Yes! Annual passes and membership fees are good to remember.

      Reply
  10. Kellie says

    January 12, 2015 at 9:29 am

    What we’ve been doing hasn’t quite been working. Most of our income is eaten up by regular expenses, and the rest has been staying in the checking account as a “slush” fund for whatever comes up. We should probably envelope more expenses and leave the envelopes at home until we need them!

    Also, this might not necessarily be a budgeting tip, but if you have an irregular expense that you are writing a check for, deposit that money into a different checking account and write the check out of there. Example, we had a car repair bill and a late wedding bill that we were anticipating. Once we got the bills, I transferred the money into the checking account that I literally keep $1 in to keep it open and wrote checks out of there. This way, the money is accounted for and I don’t have to keep remembering to check if it has been taken out yet. I made this mistake with the butcher, and a month later I still have to remember that the check hasn’t been cashed yet.

    Reply
    • Stephanie says

      January 13, 2015 at 10:44 am

      In Day 7 I talk more about this. If you’re using YNAB, you essentially have envelopes, but you can have the simplicity of having your fewer accounts. Before we used YNAB, we had a million savings accounts for all of our sink funds where we would put 1/12 of each of our annual expenses each month. It was a hassle, so I really love the way YNAB solves that problem.

      Reply
      • Kellie says

        January 14, 2015 at 8:12 am

        I could see where that would come in handy, but I would still have to balance my check book. I don’t have those kinds of expenses come up very often, but it is nice to have when I know I will need to mail a check to someone who may not deposit it right away. For normal operating, we only use one checking account. It is something Dave Ramsey encourages, and has simplified our lives after we got married.

        Reply
  11. Megan says

    January 12, 2015 at 9:04 am

    YNAB has really gotten me thinking about these catrgories. I have one for our live-in Maid/nanny, two separate catrgories for Diapers/formula, and one for Amazon since we are purchasing a lot of random goods that we can’t get here like baby cough medicine and movies etc. we just had our car registration come up as well as a fee for picking up,our dogs at the airport. To get the dogs released they wanted $200 in addition to the $2,600 to ship them here in the first place and the car was almost $500 because you pay all your insurance here upfront for the year. Now we know we need catrgories to save up for both of them so we don’t loose a whole paycheck. We are still trying to get things back on track.

    Reply
    • Stephanie says

      January 13, 2015 at 10:40 am

      Budgeting itself is an eye-opening experience, but doing it overseas surely has even more surprises!

      Reply
      • Megan says

        January 13, 2015 at 12:01 pm

        Well it doesn’t help that there is a lot of corruption. Technically we were not supposed to pay fee to get our dogs I know people who payed nothing but they have no accountability so they just decide at the time how much they can shake us down for and we love our dogs so we can’t just leave them there. We won’t find out about any traffic tickets till we go to register our cars again. The unknown is very frustrating and impossible to plan accordingly.

        Reply
        • Stephanie says

          January 14, 2015 at 8:51 pm

          Yikes! That is totally frustrating and scary Megan!

  12. JennyK says

    January 12, 2015 at 7:00 am

    Doctor visit and Dental Copays, Prescriptions

    Reply
    • Stephanie says

      January 13, 2015 at 10:39 am

      Thanks JennyK! Those are good ones. We don’t have any prescriptions, so I never think of that one!

      Reply
  13. Nichole @Budget Loving Military Wife says

    January 12, 2015 at 6:45 am

    After years of budgeting, we have found the simpler the better. Although in the beginning it is important to figure out where exactly your money is going, so I’m loving your strategy Stephanie to help break it down.

    Of course, everybody’s budget is going to be different. But we have found that having fewer categories makes it easier on us. For example, we have a “grocery” fund and that includes all food (except restaurants) and all household supplies. We also have individual “fun money” categories, but we also use these funds for haircuts, makeup, etc. We do have a miscellaneous fund and it has saved us from constantly readjusting our budget. Some people call it a “slush” fund… but it just picks up the small random expenses like bolts at the hardware store and small car maintenance purchases like windshield washer fluid.

    Reply
    • Stephanie says

      January 13, 2015 at 10:38 am

      Thanks Nichole! Once you get into budgeting you definitely find your groove and what works for you. Like you said, for people who are just starting out, it’s really important to get a clear picture of where your money is going.

      Reply
  14. Samantha says

    January 12, 2015 at 6:18 am

    Using YNAB has been helping me get an idea of where my money goes. I need to sit down tonight and write the categories out. The perodic ones are the hardest, becuase honestly I forget about them until they just show up.

    Reply
    • Stephanie says

      January 13, 2015 at 10:36 am

      Yes! Those periodic ones do sneak up on you. When you do think of them, you can stick them in YNAB and start putting money toward them, which is especially nice for the big ones!

      Reply
  15. Stephanie says

    January 12, 2015 at 5:27 am

    What is it about that B word that just makes me cringe?

    One thing I had planned for this week was to set my budget, because I know we have a good amount of extra income yet we never see any end in savings. So I figured its time for a budget!!

    Reply
    • Stephanie says

      January 13, 2015 at 10:34 am

      It will be exciting to find and save all that extra money!

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Search

Welcome to Six Figures Under! I'm Stephanie! Come read our story of how we got into and paid off six figures of debt!
  • Facebook
  • Instagram
  • Pinterest
  • Twitter
  • YouTube

Our Big Goal

In Your Inbox!

Want to start a money making blog? You don't need to be a tech wizard! Here's the step-by-step photo tutorial! You can do this!

Top Posts

  • 🥛 7 Smart Ways to Use Almost Expired Milk (Don't throw it out!)
    🥛 7 Smart Ways to Use Almost Expired Milk (Don't throw it out!)
  • Why I don't freeze soup (and what I do instead)
    Why I don't freeze soup (and what I do instead)
  • 5 Smart Financial Moves We Made as First Time Home Buyers
    5 Smart Financial Moves We Made as First Time Home Buyers
  • 🍅Homemade Tomato Sauce from Tomato Puree 🍅
    🍅Homemade Tomato Sauce from Tomato Puree 🍅
  • Cost of Setting Up Our Airbnb Rental
    Cost of Setting Up Our Airbnb Rental
  • Thinking Outside the Bolt: How I Get Fabric Free or Cheap
    Thinking Outside the Bolt: How I Get Fabric Free or Cheap
  • 💸 Is a deep freezer worth it? 💸
    💸 Is a deep freezer worth it? 💸
  • Easy Homemade Pie Crust in Bulk
    Easy Homemade Pie Crust in Bulk
Now there is a simple and powerful way to track your blogging income and expenses to know exactly how profitable you are!

Find it On AMAZON!

READER FAVORITES

Expert Tips to Save Money on Road Trips
How and Why to Live on Last Month's iIncome
Earning on Etsy Series
How to Set Up a Self-Hosted WordPress Blog

Copyright © 2013-2021 Six Figures Under

Privacy Policy · Copyright © 2021 ·Tasteful Theme on Genesis Framework · WordPress · Log in