A personal budget can help a family or individual ensure that money is available to pay bills, save and run a household. An effective personal budget must include every area in your life where you spend money. Before creating your personal budget, spend some time analyzing where your money goes each week or month. Monitor your spending for a month by writing down every penny you spend in a notebook to get a handle on your habits and expenses. Creating a personal budget can show you areas that must be cut to live within the restraints of your income.
The household expenses on your personal budget must include every bill you pay to keep your house running during the month. The mortgage or rent, utility bills, appliance repairs, household goods such as cleaners, household services such as landscaping or pool cleaning are all items to include on your personal budget. Some items such as utility bills, rent and household services have specific amounts or averages that you can include on your budget. Items such as cleaning products or goods require you to determine the amount you will spend each month.
Vehicle and Transportation Costs
Your vehicle and transportation costs must include a car payment, gasoline, vehicle maintenance, state registration and inspections. You should also set aside an amount each month for vehicle repairs to prepare for breakdowns. Include bus, taxis and public transportation if family members use these services.
Budget for medical, homeowners, automobile, dental and life insurance payments in your personal budget.
A personal budget should include an amount for savings. Your savings entries on the personal budget should include savings for retirement and college education in addition to an amount for emergency situations.
Budget for medical expenses not covered by insurance such as co-pays, prescription medications and home medications such as over-the-counter medications. A medical savings account or health savings account may be necessary for some health insurance policies with high deductibles. Include co-pays and expenses not covered by dental insurance as well.
Clothing and Personal Care
Part of your budget should include funds for clothing for all members of the family. Personal care entries on a budget may include hairdressers, gym memberships and other similar expenses.
Estimate the amount that you will spend on groceries monthly on your personal budget as well. This can be determined by monitoring your spending habits for a month. This should also include lunches for those family members that purchase lunch at work or school.
Dinners, movies, shows, sporting events, cable television and other entertainment expenses should be present on your personal budget. Determine the amount of money that you typically spend on these items by monitoring your entertainment spending for a month. You can also set limits to your entertainment spending with a personal budget.
Set aside money each month for individual or family vacations. Planning for your family vacation each month ensures that you will have the funds available to take the family on a trip once or twice a year. You can also choose to save for a longer period for a family vacation.
Loans and Credit Cards
Include all your loan and credit card payments on your monthly budget. Loans such as car loans and mortgage payments are included in other areas of the budget.
Always include an amount for miscellaneous items in your budget. This is the amount of money you carry in your pocket each week and can include children’s allowances and miscellaneous money kept in the home.
- Gather Little by Little: Personal Budget Categories- The Key to Tracking Your Money
- Federal Trade Commission. "Making a Budget - What It Is." Accessed June 6, 2020.
- Consumer Financial Protection Bureau. "Financial Terms Glossary - Fixed Expenses." Accessed June 6, 2020.
- Consumer Financial Protection Bureau. "Financial Terms Glossary - Variable Expenses." Accessed June 6, 2020.
Luanne Kelchner works out of Daytona Beach, Florida and has been freelance writing full time since 2008. Her ghostwriting work has covered a variety of topics but mainly focuses on health and home improvement articles. Kelchner has a degree from Southern New Hampshire University in English language and literature.