Last week we talked about how to get started with doing a zero-based budget. Well this week, we’re going to talk about budget categories – more specifically the four categories you can’t leave out of your budget. They just so happen to be some of our favorite budget categories!
1. Saving
If you’re not out of debt (yet), then you should have a little money saved up for emergencies. This way you’re not tempted to use credit cards for any emergencies that occur. And if you’re out of debt, then you should have even more money saved up for expenses. Dave Ramsey recommends 3 to 6 months worth of expenses. However, we like the sound of 6 to 12 months worth of expenses.
If you have already completed your emergency fund, saving is still not over. If you want to stay out of debt you’re going to have to learn to continue to save for the things you want and need. Think about it. You’re still going to need a car. You’ll still want to update your home. You’ll still need to retire someday. I could go on and on. If you won’t be borrowing money to do these things (I hope you won’t) then you’ll need to learn to stash money away and not touch it.
2. Things You Pay For Yearly
Sometimes when you do your budget you might forget to add the things that you have to pay for yearly. What you want to avoid is forgetting about it until the last minute and then wondering where you’re going to get the money from. You can either plan to take your lump sum from your paycheck when the bill is due or you can save for it throughout the year so that when it’s due, you’ll already have all the money.
We use to debate about this very thing. I always wanted to save monthly for big expenses, but Kim preferred to do a lump sum payment out of our paychecks. Most of the time we did it using Kim’s preferred method, but now there are a lot more things that we have agreed to save monthly for. Either way works, but the point is to make sure that you have the money.
3. Date Night / Family Night
Date night and family night are very important. Even if you’re focusing on getting out of debt (link), you can still have a little fun however often you see fit. Date night and family night don’t have to be about the amount of money you spend, but more so about the experiences you’re creating with your spouse and your family. You can be as creative as you like with your ideas. For example, if you’re choosing to have a night at home, you could cook a special dinner and dessert with your spouse for date night. For family night, you could go for ice cream with the kids and then have a game night. (aff link to family games on Amazon)
4. Blow Money
This is one of my favorite parts of the budget; I look forward to it every time. Sometimes I save it up and sometimes I spend it no sooner than I get it! If you don’t know what blow money is, it’s just what it says – money that you can spend on whatever you like. It’s like your own personal spending money. It shouldn’t be an amount that’s too little nor should it be too much. We have found that the sweet spot for each of us in regards to blow money is $60 bi-weekly.
Some people say that you shouldn’t spend blow money on things that you should include within another category of your budget. I somewhat agree with this. We don’t use blow money to buy gas for the cars or groceries. We will sometimes use it at a restaurant if we’re randomly treating the other person or going dutch – Yes we go dutch sometimes! And there are times that I might use it to buy a new purse or a shirt. So ultimately, I say it’s up to you (and your spouse) on how you choose to use your blow money.
Great list! I’ve definitely been guilty of neglecting the second one. But have since made the adjustment. Fool me once…
Shame on you! We were guilty of that one too. Luckily we never racked up any debt to take care of those things.
3 and 4 were easy to neglect for me when I got into heads down bill repayment mode… it’s easy to forget there is a life to live while you’re working down the debt. Neglect of those things can lead to resentment and stress… great list!
They most certainly can. We all have to remember that although we’re trying our best to secure our future, we still have to live now as well. It can be a fine line, but I think it’s doable.
I agree with the other readers, great list! I try to limit #3 when I know that #1 is not where it needs to be or if I have to actually tap into it for emergencies and need to replenish. It is stressful and no fun at times, but if there is nothing in savings or an emergency fund and something happens it would definitely be less fun than sacrificing going to a movie. Lol! Cheap and free dates work so the fun is not completely taken away though, so I survive. Lol! Thanks guys!
I can’t say that I disagree with you there! There were/are times that we have to make the sacrifice as well. It’s not fun, but it’s literally worth it in the end.
This is so accurate. I’ve been guilty of leaving “blow money” out and it adds up quickly. So important to keep track of.
It most certainly does!
I just registered with Mint a couple months ago and quickly realized there were yearly expenses I needed to budget for, such as vehicle registration and paying taxes. Now that I think of it I need to add car insurance, I get a discount for paying in full for the year so I pay it for the year instead of monthly.
Yep. Paying yourself monthly for those yearly payments definitely takes the stress out of it. You have the money right there and you don’t have to make huge changes to your budget just to get it paid.
I’m so exciting about implementing this concept!!! I’ll keep you posted
Please do! And let me know if you need any help or have any questions.