The right budget categories transform chaos into clarity. Too few and you miss important details; too many and you'll never stick with it. Here's the complete list of budget categories you need, with recommended percentages and practical tips.
Why Budget Categories Matter
Good categories help you:
- See patterns: Where does money actually go?
- Set limits: Control spending in problem areas
- Make decisions: Know what to cut when needed
- Track progress: Measure improvement over time
- Reach goals: Align spending with priorities
💡 The Sweet Spot
Most people do best with 10-15 categories. Enough detail to be useful, simple enough to actually track consistently.
Essential Categories (Fixed Expenses)
These are your non-negotiable costs each month. Aim for 50-60% of take-home income.
1. Housing (25-35% of income)
- Rent or mortgage payment: Your biggest expense
- Council tax: Don't forget this
- Home insurance: Buildings and contents
- HOA/service charges: If applicable
2. Utilities (5-10% of income)
- Electricity: Track usage patterns
- Gas/heating: Higher in winter
- Water: Often overlooked
- Internet/broadband: Essential for most
- Mobile phone: Individual or family plan
- TV licence: £159/year (divide by 12)
3. Transportation (10-15% of income)
- Car payment/finance: If you have one
- Car insurance: Annual cost divided monthly
- Petrol/fuel: Track this separately
- Public transport: Season tickets, daily fares
- Parking: Work, residential permits
- Car tax (MOT): Annual, budget monthly
- Maintenance: Regular services, repairs
4. Insurance (3-5% of income)
- Life insurance: Especially if you have dependents
- Income protection: Covers loss of earnings
- Critical illness: Optional but valuable
- Pet insurance: If you have pets
Set Up Your Categories
iBudget helps you create custom categories that match your spending patterns perfectly.
Variable Essential Categories
These fluctuate but are still necessary. Aim for 15-25% of income.
5. Groceries (10-15% of income)
- Supermarket shopping: Main grocery shop
- Top-ups: Quick shops during the week
- Household supplies: Cleaning, toiletries
ℹ️ Split Food Categories
Keep "Groceries" separate from "Dining Out." If you always go over budget on "food," this split reveals whether you're buying too much or eating out too often.
6. Healthcare (3-5% of income)
- Prescriptions: Regular medications
- Dental care: Checkups, treatments
- Optician: Eye tests, glasses, contacts
- Therapies: Physio, counseling, etc.
- Over-the-counter: Vitamins, pain relief
7. Childcare (0-15% of income, if applicable)
- Nursery fees: Often the biggest expense after housing
- Childminder: Alternative to nursery
- After-school club: For school-age children
- Babysitting: Occasional care
Discretionary Categories (Wants)
The fun stuff. Aim for 20-30% of income here.
8. Dining Out & Takeaways (3-7% of income)
- Restaurants: Sit-down meals
- Fast food: Quick meals
- Delivery: Uber Eats, Deliveroo
- Coffee shops: If significant, track separately
- Work lunches: Consider packing instead
9. Entertainment (2-5% of income)
- Streaming services: Netflix, Disney+, Prime
- Music: Spotify, Apple Music
- Cinema and events: Tickets, concerts
- Gaming: Subscriptions, new games
- Books and magazines: Physical or digital
- Hobbies: Supplies, memberships
10. Fitness & Wellness (2-5% of income)
- Gym membership: Monthly or annual
- Fitness classes: Yoga, spin, etc.
- Sports equipment: Running shoes, weights
- Sports teams/clubs: Membership fees
11. Personal Care (2-4% of income)
- Hair salon: Cuts, color
- Beauty treatments: Nails, facials
- Grooming: Barber, skincare products
- Cosmetics: Makeup, fragrances
12. Clothing & Accessories (3-5% of income)
- Everyday clothing: Basics, work clothes
- Shoes: Separate if significant spend
- Accessories: Bags, jewelry, watches
- Dry cleaning: Maintenance costs
13. Travel & Holidays (2-8% of income)
- Annual holiday: Main vacation
- Weekend trips: Short breaks
- Travel fund: Save monthly for annual trip
- Visiting family: Travel costs
Financial Goal Categories
Pay yourself first. Aim for minimum 15-20% of income here.
14. Emergency Fund (5-10% until fully funded)
- Starter fund: First £1,000
- Full fund: 3-6 months expenses
- Extra cushion: 9-12 months for self-employed
15. Retirement Savings (10-15% of income)
- Workplace pension: Auto-enrollment minimum
- Additional pension: Top up if possible
- Private pension/SIPP: Self-employed option
16. Debt Repayment (varies)
- Credit card payments: Beyond minimum
- Personal loans: Fixed monthly amount
- Student loans: Usually automatic
- Car finance: Monthly payment
17. Savings Goals (5-10% of income)
- House deposit: First-time buyer fund
- Wedding fund: Save for the big day
- Car fund: Save for next vehicle
- Home improvements: Renovation savings
18. Investments (5-10% if beyond basics)
- Stocks & Shares ISA: Tax-free investing
- General investment account: After ISA is maxed
- Index funds: Long-term growth
Other Important Categories
19. Gifts & Donations (1-3% of income)
- Birthday gifts: Family, friends
- Christmas fund: Save monthly for December
- Wedding gifts: When invited
- Charity: Regular or one-off donations
20. Education (varies)
- Courses and certifications: Professional development
- Books and learning materials: Educational resources
- Conferences: Industry events
- Children's education: School trips, activities
21. Pets (1-3% if you have pets)
- Pet food: Regular meals
- Vet bills: Annual checkups, treatments
- Pet insurance: Monthly premium
- Grooming: Regular maintenance
- Supplies: Toys, bedding, litter
22. Home Maintenance (1-3% of income)
- Repairs: Plumbing, electrical
- Appliance replacement: Sinking fund
- Garden/lawn care: Maintenance
- Cleaning supplies: Household products
23. Miscellaneous (2-5% of income)
- Catch-all: Unexpected small expenses
- Buffer: Prevents budget failures
- One-offs: Things that don't fit elsewhere
⚠️ The Miscellaneous Rule
If "Miscellaneous" is consistently your biggest category, you're not categorizing properly. Break it down into specific spending areas.
How to Choose Your Categories
Start With These Core 10
- Housing
- Utilities
- Groceries
- Transportation
- Dining Out
- Entertainment
- Personal/Clothing
- Savings
- Debt Payments
- Miscellaneous
Then Add Based on Your Life
- Have kids? Add childcare, children's activities
- Have pets? Add pet category
- Homeowner? Add home maintenance
- Multiple savings goals? Split savings by goal
- Overspend somewhere? Give it its own category for accountability
Category Percentage Guidelines
Here's how a balanced budget might look:
- Housing: 25-35%
- Transportation: 10-15%
- Groceries: 10-15%
- Savings & Debt: 15-20%
- Utilities: 5-10%
- Dining Out: 5-7%
- Entertainment: 3-5%
- Clothing: 3-5%
- Healthcare: 3-5%
- Personal Care: 2-3%
- Miscellaneous: 3-5%
💡 Adjust to Your Reality
These are guidelines, not rules. If you live in London, housing might be 40%. If you're debt-free, you can save 30%+. Make it work for YOU.
Common Category Mistakes
- Too many categories: You won't track 30 categories consistently
- Too few categories: "Expenses" tells you nothing useful
- Overlapping categories: Clear lines prevent confusion
- Not adjusting: Your categories should evolve with your life
- Hiding problems: Lumping overspending into "misc" avoids accountability
When to Review Categories
- Life changes (marriage, baby, job change)
- Moving to new location
- Major expense changes
- You keep going over budget
- At least annually
About iBudget
iBudget helps couples and families take control of their finances with simple, collaborative budgeting tools. Track spending, set goals, and build wealth together.
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