How To Properly Categorize Your Expenses When You Budget
Here’s a quick tip when creating a budget or as I like to call it a financial forecast. The first step to creating a budget is to bring all your expenses together and categorize them. One of the easiest and most intuitive ways to categorize for your budget is by organizing your expenses by time frames. When it comes to money we tend to naturally organize things by time for example we look at our annual salaries, monthly bills, bi-weekly paycheck and weekly grocery and errand runs. I created this chart to help you organize and prioritize your expenses.
| CATEGORY | EXPENSES |
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The Unexpected
These would be the expenses that you can’t know when or if they will happen because they happen quickly and without warning |
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Cyclical
These are the expenses that come around every once in a while but are on a set pattern. They would be bills that come around annually, semi-annually or quarterly. |
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Monthly
This is probably the most common type of expenses that people think about. They come every month. |
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Weekly
These are the detail expenses that you pay every week and sometimes can become so common you can forget to add them to your list. |
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Discretionary Expenses
These would be the other expenses that pop up from time to time but you have direct control on whether or not these expenses exist or how much is spent on them. |
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How do you organize and prioritize your expenses? Leave a comment below and let me know.