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Which Categories to Use for Your Budget

by Jeffrey Kosola on August 24, 2010

When building a budget you will be faced with a choice, which categories to use for your budget. Categories are a great way to personalize a budget to fit your needs. Without categories, a budget would be called a checking account. You can even choose to have a World of Warcraft as category so you can track all spending associated with this time honored tradition (ok, it will be time honored soon). What the categories are doesn’t matter as long as you understand what they mean to you and your family.

In the video, I explain why categories are important and talk about the ones that I personally use. Just so we are clear, a budget does not exist unless you have some categories set up. I’ve included a worksheet with many category thought starters to get you going.

The Debt Destroyer Categories Edition .MP4

Download the mp3 here

Download The Debt Destroyer Categories Thought Starter Worksheets Below

Good luck everyone…

{ 11 comments… read them below or add one }

Little House August 24, 2010 at 11:48 am

My categories are very similar, but not nearly as detailed! I like the way you sub-categorized specific items like personal care. I have a personal category, but I haven’t been very diligent in narrowing down sub-category items like haircuts. Excellent way to get someone started (or revise an already existing budget!)

Reply

Jeffrey Kosola August 24, 2010 at 11:59 am

Hi Little House,

I thought I was in the “not many” category, category :-) It’s works great for me, and that is how I have my sub-accounts setup in ING. We’ll get to the complete ING setup in the next few weeks. Oh how I just love my ING accounts and setup…

As a young lady, you probably should have a “hair” category or at least a “personal care” category. That way your man can look at the amount allocated to it and it will enable him to get more money sent his way (fair is fair). I mean — looking good isn’t cheap.

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Financial Samurai August 25, 2010 at 1:36 am

Excellent quality video Jeff! How many categories total do you have again?

Also, I sent you an email the other day. Let me know your thoughts either way. I’ll have others interested, but just wanted to check with you first. thnx

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Jeffrey Kosola August 25, 2010 at 4:00 am

@FS Thanks Sam I’m glad the quality shines through. Oh, you were talking about the video and not the star :-) The HD does show up well and I think the mic I’m using helps a lot. The only problem I have with the video is that I’m rendering them on a netbook. Netbooks are not know for their power. It takes up to 2 hours to make a 6 minute video on this baby (processing time). It only take a few minutes to line up the audio with the video and add the graphics, the rest is just the computer. I love my netbook though, it makes it easy for me to sneak in some blogging while I’m at work. Oh well, one of these days I’ll hit the big time and be able to buy a quad processor machine. Until then, I’ll just keep on keepin’ on :-)

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Nunzio Bruno August 25, 2010 at 1:05 pm

Nice camera work! I dig the categories you have for you budget break down. I am a huge supporter of the KISS system too. My favorite part had to be about avoiding Christmas debt and that even putting something small away every pay period makes the world of difference come crunch time.

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Jeffrey Kosola August 25, 2010 at 7:49 pm

@Nunzio Glad you like my categories, what ones do you use in your system? Christmas is a huge talking point for me. I see so many people use debt to buy gifts it just drives me crazy. Maybe that’s why I’ve written 3 posts about it so far this year :-)

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Jim August 25, 2010 at 1:15 pm

you have a funny way of putting that with out budget categories it would just be a checking account.

it was nice to see a video for a change. you have lots of good ideas. based on my experience the more detailed you are the more you dig deep and can really see what is going on and ways to improve it.

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Jeffrey Kosola August 25, 2010 at 7:53 pm

Hi Jim, I happy you enjoy the video. Once I figured out that in order to manage my money quickly and accurately I had to use categories, I was able to control my money. Having everything “under one roof” – the checking account, is just a recipe for disaster.

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Forest August 30, 2010 at 3:52 am

Hi Jeff, excellent video.

I know I have been saying this forever but finances are working now and I am saving cash….. Next step is a definitive budget. I have evernote loaded and tracking starts on Sept 1st (off to read your Evernote post now).

The hard thing for me is working out how to budget with my partner. For the most part our finances are separate and she does not want to lay down a budget the same way I do… So I think I will need 2 budgets. One for mixed payments (housing, utilities, groceries, restaurant eating which is a bi-weekly vice!) and one for personal budgeting (coffee shop visits, nights out with friends, etc etc).

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Jeffrey Kosola August 30, 2010 at 8:00 am

@Forest, hell yeah, cash is king brother :-) Great job on saving. As for the lady friend, using two budgets will work as long as you both can agree to disagree. Just make sure the common areas are talked about in advance and you both completely agree on the amount and date the funds are transferred. You MUST be on the same page with the mutual “bills”

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Forest August 30, 2010 at 11:16 am

Mutual stuff is no issue at all and really isn’t much to be honest! That is the main reason I have not budgeted so far, so little to budget.

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