There are dozens of budgeting products on the market.  I’m partial to the You Need A Budget system, but there are other great systems available.  Find a system that works with you, fine tune it to meet your needs, and then use your budget as a tool.

After selecting a budgeting system, it’s important to create specific budget categories.  When I first started budgeting, I had way too many categories.  I tried to be too specific.  Instead of managing my money, I just ended up spending time working on my budget.  If you have too many (or too few) categories, you might grow frustrated with your budget, and you might simply ditch it altogether.

What Works For Me – Budget Categories

I divide my budget into three major categories – spending, saving, and giving.  (I create a budget based solely on our household take-home pay.  In other words, I do not include pre-tax retirement contributions or employer deducted health insurance premiums.  Also, I live in a house provided as part of my compensation.)  I then divide the three major categories into the following budget categories and sub-categories.

Spending

Utilities

Electric Bill

Cellular Bill

Telephone Bill

Satellite Bill

Medical

Medical Bills

Medicine

Child Care

Daycare

Baby Sitters

Food

Grocery Store

Eating Out

Entertainment

Family Nights

Miscellaneous Spending

Clothing

Automobiles

Gasoline

Routine Maintenance

Saving

Retirement

Roth IRA 1

Roth IRA 2

Education

ESA 1

ESA 2

ESA 3

Automobiles

Automobile 1 Replacement

Automobile 2 Replacement

Automobile Repairs

Home

Furniture Replacement

Appliance Replacement

Future Home Purchase

Insurance

Automobile Insurance Premiums

Disability Insurance Premiums

Renter’s Insurance Premiums

Additional Savings

Giving

Church

Tithes

Offerings

Special Offerings

Gifts

Donations

Presents

Basically, I have 15 budget categories, with most categories broken down in to two or three sub-categories.  (Once in a while, I’ll add an extra category or two, depending on circumstances.  For instance, for a long time, I was saving for a new lawn mower, so there was a specific savings category labeled lawn mower.)

For me, and my family, it works best if we limit our number of budget categories.  I find that this makes things a bit more manageable – and more user-friendly.  (If you have irregular income – and most folks do – I suggest you read this post:  How To Create A Budget If You Have An Irregular Income.  You’ll find information for setting up a budget, even if your month-to-month income fluctuates.)

What About You? -

I’d love to hear from you, my awesome readers.  How many budget categories do you use?  Have you found that you like a super-simple system, or do you prefer something much more complex?  Leave comments here and / or connect with me via Twitter.