What to Include in a Personal Budget

Review old bills when creating a new budget.

Review old bills when creating a new budget.

The best strategy for planning a personal budget is to be as inclusive as possible. If you think of it, include it. You'll astound yourself at how quickly all the little things add up. Don't forget to add a few percentage points over costs from the previous year as a reasonable estimate for inflation.

Your Income

One side of your budget is your income, the money coming in. Include your take-home pay, plus other sources like rental income, trust fund payments, fixed-income sources and any amount you can count in bringing in on a regular basis. Only include the money that you can count on coming to you on a regular basis; do not count the money from that part-time job you plan to get or the slot machine payout you're hoping to win. Look at last year's tax returns to help figure out what's left after you pay the taxman.

Big Expenses

The biggest expenses are usually the easiest to track because they are mostly fixed. These include your monthly mortgage payment or rent, property taxes, homeowner or condo association fees, property insurance, car insurance, health insurance, and other debts like student loans or car payments. Don't forget your telecommunications package and any other fixed costs, like childcare or life insurance premiums.

Regular Expenses

Include utility payments like electrical, gas or other heat, and water and sewer. Don't base your budget on just one sample month. Take the average amount per month for the entire previous year, since costs are like to vary great during different seasons. If make regular charitable donations or have memberships to a gym, museum, video rental club or anything else where you make monthly payments, you must include them. Transportation expenses like a public transportation pass, parking and gasoline can also be estimated based on the prior year.

Variable Expenses

Food expenses vary from one grocery or restaurant bill to the next, but review spending from a few months to come up with an average. Home and car repair and maintenance is unpredictable but need a place in your budget. If you already know you're going to have a major repair or replacement coming up, start to save up for that now. As for the unknowns, some experts recommend budgeting one percent of the your home or car's base price for annual repairs. Furniture, home decoration and renovations need to be a part of your budget, too.

Small Expenses

The devil is in the details, and the small expenses are precisely the place where your budget least likely to reflect reality since it's so easy to overlook them. Two movie tickets at $10 each just once a month—not even counting a drink or popcorn—is almost $250 a year. One $50 pair of shoes every other month is also $250 a year. You must try to estimate entertainment, clothing and other fun or optional expenses.

Investments and Savings

Retirement plan contributions, other investment accounts, emergency fund savings and any other type of investment or savings should be line items in your budget. When you make them a line item in your budget, you show your commitment to saving and investing.


About the Author

Annabella Gualdoni has written newsletters and reports for corporations and nonprofits since 1994. She is a real estate professional and also teaches subjects including international cooking and travel, dating/relationships and personal finance. Gualdoni has a Bachelor of Arts in international development from University of California, Berkeley, a Master of Arts in international relations from Boston University, and a Juris Doctor from Boston College Law School.

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