List of Typical Monthly Expenses

It can be overwhelming to manage your everyday life while also trying to manage your money responsibly. That’s a lot of plates in the air for most of us.

People – individuals and families – typically have a list of regular monthly expenditures that looks like this:

1. Housing
2. Utilities
3. Food and Groceries
4. Transportation
5. Insurance
6. Healthcare
7. Debt Payments
8. Savings and Investments
9. Entertainment and Recreation
10. Personal Care
11. Children’s Expenses
12. Pet Care
13. Miscellaneous

It helps to identify those plates and know how to prioritize them. That means recognizing your monthly expenses and keeping them in line with your monthly income.

Understanding Monthly Expenses

Having a plan is good. Being prepared for your plan to change is even better.

Some monthly expenses in your budget are fixed, meaning they are the same every month. Your mortgage or rent is in this category. So is your car payment and the expenses you choose to set aside, such as contributions to your retirement account or emergency fund.

And then there are the variable expenses. You may need more gas one month, or gas prices may shoot up. Entertainment can vary depending on whether you go to a free local concert, a show at a small venue, or Taylor Swift’s latest stadium show.

When making a budget, you have to figure out these variations and prepare to adjust accordingly. There is help available on your smartphone. You can install an app that helps you track your expenses and even, in some cases, find redundancies and remove them.

Fixed Expenses

There is a group of reliable, steady payments that you can build your budget around – your monthly mortgage or rent; your car payment; your life insurance premium; and your basic cable bill.

That doesn’t mean they never change. You may have a rent increase to cope with. If you have an adjustable-rate mortgage, higher interest rates can affect your payment. The cable company or your cell phone provider can raise rates.

But those are occasional, even rare, occurrences. For the most part, fixed expenses remain fixed. When budgeting, your most important concern is including them all.

Variable Expenses

Other expenses are subject to fluctuation. Inflation drove up many costs over the past year. That trend has been reversed to a degree. But the important point is to be aware of such changes and budget accordingly.

Gas and food prices can rise and fall without warning. Utility bills can vary depending on fuel costs, but also on the seasons. You will likely pay more for heating in the winter and cooling in the summer, but those costs depend on where you live and your climate.

Cutting your spending when prices rise – by reducing the use of gasoline and heating fuel, using coupons at the grocery store, insulating your home, and so on – can be a buffer against variable costs.

Expenses To Include in Budget

No two budgets look exactly the same. Budgets are as individual as the people who create them. But there are some things that all humans pretty much have in common.

That’s why the average budget contains certain familiar categories. This is helpful because it means you can learn from comparing your budget to those of others.

Here is a look at typical budgeting categories and tips on how to save in each one.

1. Housing

This is at the top of the list for most of us, because it is the largest monthly payment as well as the most urgent. You can get by without a date night or a new dress, but you don’t want to find yourself and your family out on the street. The ups and downs of homeowning should be analyzed before you decide between buying and renting.

One advantage of making a budget is the ability to lay out all of your expenses and assess your priorities. It is a good idea for housing costs – mortgage or rent, insurance, maintenance – to stay at or under 25% of your monthly take-home pay.

2. Utilities

This is an expansive category, encompassing everything from electricity to water to heating and cooling and even your internet provider. These items can vary wildly based on your location. It is more expensive to heat your home in Wisconsin than it is in Florida and there is room for reducing costs by keeping a close eye on your usage.

Saving on utilities is good for your wallet, but also good for the environment. Insulating your home, keeping an eye on your thermostat, and cutting down on use of fuel help with both goals.

3. Food and Groceries

This is one of the trickiest areas for budgeting, which makes it perhaps the most important for creating and sticking to a plan. Food costs are volatile, especially in this recent era of inflation, and can be affected by climate and supply chain issues.

Meanwhile, there is a wide range of options, from fast food to nice restaurant meals, to lovingly prepared home-cooked meals. It is tricky to control costs while maintaining good nutrition standards and food that just plain tastes good. Finally, you will find your grocery shopping affected by the growth of your family as well as your growth as a home chef. Search for coupons electronically, take advantage of BOGO’s, and don’t be afraid to make leftovers tomorrow night’s meal.

4. Transportation

Transportation expenses are extremely volatile, as anyone who sees the prices change at their local gas station can attest. There is a mix of fixed costs, such as your monthly car payment, and variable costs such as parking, maintenance, and fuel. Car insurance can be either and adds a substantial amount to your monthly costs.

You can alter your costs by switching to an electric vehicle, or by relying on public transit or ride-sharing to get around. Part of the price you pay is for the convenience of jumping in your car and going wherever you want. You lose that when you take the subway or an Uber, but there’s no car payment, insurance, or fuel costs.

5. Insurance

If insurance is taking too big a bite of your budget, try bundling. You can create an insurance umbrella, one for healthcare, one for homeowners insurance, and one for car insurance.

Another way to approach insurance is to keep costs for all forms of insurance in one category. As different as forms of insurance seem, most have one significant thing in common when making your budget: you can save significant money by shopping around for the lowest rates. Be sure, though, to combine price with the necessary level of protection.

6. Healthcare

This area is constantly changing, as employer-provided health insurance gave way to employees footing part or all of the bill. Then the government changed the landscape with the Affordable Care Act.

For budgeting purposes, whatever you pay per month should cover out-of-pocket costs for doctor visits and dental appointments, prescription costs, and emergency healthcare savings.

This is another area where it pays to spend a day shopping around. Competition is tight and there are bargains to be found for consumers who take the time to comparison shop.

7. Debt Payments

Debt is a minefield for most of us. We go into debt to buy a house or a car, to get an education, and then to pay for anything we really want (but don’t need) from expensive dinners to nice vacations. But if we incur debt in scattered, impulsive swipes of our credit cards, a budget with a plan will help us manage the problem.

Your monthly budget should include all of your debt obligations, from credit cards to personal loans to student debt. If you can’t find a way to include a budget line for reducing debt, contact a credit counselor from a nonprofit agency and let them show you ways to make that happen.

8. Savings and Investments

There are two reasons it is smart to include savings and investments as part of your monthly budget. First, it is smart to save money. Second, it is very smart to include savings in your monthly plan as early as possible. It helps you learn to live off your remaining take-home pay without the savings feeling like a sacrifice.

Slow, steady savings build wealth that can affect everything from your retirement to your ability to send your children to college to your ability to respond to an emergency.

Open a separate bank account and tell your employer to take a percentage of your weekly paycheck and put it into that account. It will silently grow into something substantial.

9. Entertainment and Recreation

These may seem the very opposite of sober planning but think about it. If your budget includes reasonable amounts for fun – whether that means going to concerts or bowling or streaming home entertainment or all of the above – having a line that pays for it will make sticking to your budget less of a chore.

And if you’re careful and stick to your plan, guess what? You’ll be able to afford more fun!

10. Personal Care

Taking care of yourself can be expensive but it’s also worth it. Looking and feeling good helps at work, at home with family, and when your self-esteem is strong at any time. Be realistic about the costs of grooming – a regular haircut, products for home care – as well as health and wellness products.

11. Children’s Expenses

You don’t understand how much it can cost to care for children until you have them. But you won’t get as much pride and pleasure from any other monthly expenses. There are general costs such as housing, utilities, and groceries, but this budget line should cover school costs, including meals; supplies; activities, and clothing.

12. Pet Care

We love them, so it’s important to care for them properly. That means healthy food, treats, veterinary care, medicines, toys, a bed, and even pet insurance.

13. Miscellaneous

You can’t plan for everything, but you can plan for things you didn’t plan for. Unexpected expenses arise from time to time. You will be better prepared to deal with them if you include a sensible amount in your monthly budget.

Tools and Methods for Budgeting

Yes, there’s an app that will do the job of budgeting for you. Indeed, there are a number of budget apps that perform various functions. Some will spot redundancies in your expenses (two Netflix accounts!) and alert you or even remove one.

You can buy a pad of paper, or you can find a spreadsheet template and do all of your work on your computer. That means automatic organization and math functions. And if you budget for your budget tools? That’s twice as smart!

Setting a Budget

In simplest terms, creating a budget means getting your spending in line with your income. That means an assessment of your actual take-home pay and a realistic plan for fitting your monthly spending under that cap.

But things change and so do people. A young adult may be more interested in building a stable life while spending time having fun and interacting with people. A young parent will be interested in a secure home life and start to plan for the future. An older person is looking to plan for retirement and manage debt and healthcare costs.

Budgeting benefits anyone, at any stage of life. It just leads to different goals for different people.

Tips for Reducing Expenses

A great way to improve your financial picture is to win the lottery or get a fat raise. A realistic way is to trim your expenses. The less you spend, the more you have left to spend. It’s math!

There are different ways to cut costs. The most direct is to stop doing some of the things that cost money. You can go out less often, drink less, trade an expensive gym membership for home workouts, play one less round of golf per month, and so on.

Many of our monthly expenses can be reduced by shopping for better rates and cheaper plans. Cell phone companies advertise their phone and data plans constantly. Your cable TV bill can be eliminated entirely or reduced by removing little-used or overlooked channels and features.

You can use coupons or member discounts at the supermarket and shop for sales at department stores. One good plan is to shop for clothes suited to the current or previous season. While they’re filling the racks with fall fashions, grab some spring and summer items at a discount and wear them next year.

Managing Your Monthly Expenses

Make a budget. That’s often the first (and, frankly, the best) piece of advice people will give you about your finances. A daily budget would be unmanageable and a yearly budget invites too many changes and mistakes.

So a monthly budget it is.

The process of budgeting forces you to look at and think about your income and how you spend it. That new insight can almost immediately pay off in better and more informed decision-making. Instead of your finances resembling a stampeding herd of bison, you build a corral and keep a closer eye on everything.

It is worth the effort, and the sooner the better. The sooner you start saving money and reducing waste, the easier your finances will be to manage.