Budgeting Basics | Our Budget Categories

You asked. I’m answering.

In the interest of maintaining a modicum of privacy, I am not disclosing the actual dollar amount we spend, rather the percentage that each category represents of our overall spending.

Please do not deem this post as proscriptive. People often ask me what they “should” be spending on groceries. They are looking for a percentage.

In my opinion – financial expert though I am not – there is no right or wrong percentage for groceries – or any other category, for that matter.

You must simply make it all balance. What goes out must come in first. 

The outgoing percentages should reflect your priorities. If you have kids at home, then things like food, clothing and schooling are going to be higher now than they will be in twenty years. If you are nearing retirement age and lost money in the market, then your savings category will be higher now than probably ever before.

Income MUST match outgo. And outgo MUST reflect your priorities. If it doesn’t, something needs to change.

As you know, we tweak our budget every single month. Our priorities change and therefore our budget changes. What I’m sharing today is our current budget – but don’t hold me to this for time immemorial. I have no doubt that in a year, five years, twenty years it will look radically different. That’s because a budget must breathe!

With all that said, here ya go – our budget categories as of January 2012. (The percentages represent that category in relation to our total spending. And everything other than income taxes and maaser is accounted for in our total spending, since we give every dollar a “name” – even if that name is “savings”.)

Housing – 20%

  • Mortgage
  • Home owners insurance
  • Property taxes
  • HOA fees
  • Water & waste water
  • Electricity
  • Gas
  • Home maintenance sink fund

Health & Insurance – 18% (Note: We spend a sickening amount of money on health insurance because we are self-employed)

  • Monthly health insurance premiums
  • Contributions to our HSA (which covers all medical care and prescriptions)
  • Life insurance policy premiums
  • Disability insurance policy premiums

Transportation – 5%

Food – 10%

  • Groceries
  • Household cleaners
  • Personal care items
  • Pet food

Day School – 16%

Personal – 6%

  • Clothing
  • Blow money
  • Cell phones (part of this is actually a business expense, but it’s in this category)
  • Hair cuts
  • Kids activities
  • Pets (vet, meds, etc.)
  • Allowance (for the boys)

Business Expenses – 8%

  • Internet
  • Office supplies, stamps, etc.
  • Accountant (sink fund)
  • Bank fees
  • Blog expenses (server, coding, etc.)

Savings – 17%

  • Retirement
  • Sink Funds
    • Family gift fund
    • Computer replacement fund
    • Car fund (repairs & replacement)
    • Vacation fund
    • Kids college fund

After doing this for a quite a few years, we have found that fewer categories work better for us. We have been able to all but eliminate impulse purchasing that doesn’t fit into the norm of our regular categories.

Our sink funds insulate us fairly well from those unplanned but predictable expenses, and of course genuine emergencies come from our Emergency Fund. Anything else gets put on a list for the future. If we can afford to save for it now, we do – and otherwise, it waits.

Thoughts? Impressions? I’d love to hear from you about your budget categories.


  1. Thanks for sharing. How do you budget for the quaterly estimated tax payments?

    • Lily – We set aside 20-25% off the top of all earnings before we pay ourselves our payroll. Then we send that money to an ING savings account, so we don’t accidentally spend it. When our quarterly taxes are due, we just move the money back into our checking account to cover the debit. HTH.

  2. I feel the same way about fewer categories. I used to try to have a line item for everything, but it was just too much. We have a ‘cushion’ in our monthly budget for little this and that and it has been much better. It’s helpful seeing a breakdown by percentage. Thanks as always for a great post!

    • In this case, less definitely is more! I think your cushion is our blow money – which as you know I’ve had to up this year. We were overspending (oops) last year!

  3. Wow, I am mostly surprised by how low of a % your tuition costs comprise in your budget. My yeshiva bill is almost twice my mortgage, and my mortgage is quite high as well (thank you 2004 housing market)

    Question – are your % pre tax or post tax?

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