6 Monthly Expenses to Budget For

Learning how to create and maintain a monthly budget that takes into account your income, living expenses and spending habits can be difficult. However, factoring in living expenses – such as rent, your phone payment and grocery bills – into your budget is a skill that everyone needs to master to realistically assess overall financial health. That way, you can not only allocate funds strategically to boost your savings and achieve your long-term goals, but also have enough set aside for unexpected expenses, like a car repair or an emergency medical procedure.


“Budgeting is like exercising and eating right. We all know we should be doing it, there’s even lots of information available about it, yet there are few who are truly successful at it. Even though it’s simple, that doesn’t mean that it is easy,” says John Bergquist, senior founding partner at Common Sense Financial, a financial planning consultancy in South Jordan, Utah.

Bergquist says that it takes a lot of self-discipline to budget well. But it also requires crunching the numbers and identifying your habits and spending patterns. If you want to be successful at budgeting, the most important step is identifying your monthly expenses, which can help you establish a concrete financial foundation. After all, if you don’t have a good grip on necessary living expenses, and you haven’t allocated enough money for them, it’s going to be hard to have enough cash remaining to stock your emergency fund or pad your retirement account.

What Are Living Expenses?

Living expenses are any payments that go to a product or service that helps you live from day to day. Here are monthly living expenses to budget for:

  • Housing
  • Groceries
  • Clothing
  • Health Care
  • Transportation
  • Miscellaneous


Housing – including your rent or mortgage payment – is usually the biggest and hardest expense to budget for. But your rent and mortgage bills aren’t the only living expenses to consider when it comes to housing costs. Your utility bills, such as your electric or gas bill or your trash removal, also fall into this category. And your homeowners or renters insurance is also in this category. Also consider property taxes and miscellaneous maintenance costs, like a lawn service or a cleaning service, when assessing monthly housing expenses.


Aside from meals, you should also factor in personal care items and necessities you purchase at the supermarket, too. For example, shampoo, toilet paper and toothpaste should be included in your monthly grocery budget. You’ll also want to put cleaning supplies into this living expense category.


In addition to day-to-day work clothes, you’ll want to take into account undergarments and shoes. Anything you wear regularly should be factored into your budget, including seasonal items, like winter coats and boots.

Health Care

Your monthly insurance premium should be accounted for as a monthly living expense, in addition to copays and over-the-counter items, like cold medicine. It’s easy to forget and neglect these expenses, but it’s important to track these costs and include them in your budget.


You’ll want to categorize and track expenditures such as car payments (and car insurance and gas) or, if you rely on public transit and ride-sharing services, consider daily bus fare, taxi expenses, subway costs and Uber rides. Also, if you own a car and drive long routes, don’t forget about parking fees or tolls.


Living expenses that would fall into the miscellaneous category include your cellphone bill and your internet subscription. You can also opt to add these to the “housing” budgeting category. Other living expenses you may label as miscellaneous include funds allocated for a retirement account, your kids’ college education or an emergency fund. If you’re paying off debt, you should also track this spending and include it in your budget.

How to Allocate Enough Money for Living Expenses

When you create a budget and calculate how much you spend per category, you’ll want to collect all of your financial documentation, such as bank statements, pay stubs and credit card bills. That way, you can create your own monthly budget worksheet and get a sense of how much you’ll spend each month going forward.

Keep in mind some expenses will be fixed, such as your rent or a car payment, and many will be variable, such as groceries and gas, so the amount you spend will fluctuate a bit each month. “Also, there must be room in the budget for the fun things,” Bergquist says. “Then a budget becomes liberating instead of feeling suffocating, which is what most feel when even mentioning the word ‘budget.’ Replace the word ‘budget’ to ‘spending plan.’ It feels better. By changing the title, you change the feeling toward it, like replacing the word ‘diet’ with ‘eating plan.'”

Remember: The key to budgeting is revisiting and assessing your expenses and spending patterns regularly. Evaluate your spending once a week or at least once a month by reviewing the numbers in a monthly budget worksheet. “Reviewing your budget regularly will allow you to envision expected expenses and set financial goals for yourself accordingly,” says Allen Hudson, president of the Dallas Banking Center for North Dallas Bank & Trust Co., a community bank with five banking centers located throughout North Texas.

Hudson also says that if you’re budgeting for a family, it’s important to ensure you and your spouse are on the same financial page regarding your budget and goals. He also suggests exercising patience when mapping out a budget. “It’s important to be kind to yourself during this process. It takes a while to get the hang of it,” Hudson says.


Leave a Reply