About budget categories

When creating your first budget or simply updating one you already use, it's important to recognise that budget categories are important. And it's not just because the categories you choose can either illuminate or obscure our spending choices; your budget categories will also influence your future behaviour. As Phillip Brewer at WiseBread puts it:

Does the fitness center membership go under entertainment, or under medical? You can make a case for either.

Phillip offer an interesting suggestion for those wanting to get their budget categories right. turn to the categories used by the US Bureau of Labor Statistics (BLS) for inspiration. Phillip continues:

Looking at the BLS categories would be especially useful if you're creating your first budget, in that it's going to have lots of categories that you probably wouldn't think of.

You can read Phillip's article in full here.

Kate's zero-based budget

Wise Bread contributor Kate Luther describes herself as 'a city-girl turned country-girl who traded in the corporate 9 to 5 for a home office and a life as a freelance writer'.

Kate's article on what she calls 'zero-based budgeting' is worth reading for lots of reasons but for one in particular: her focus on that dodgy category in every budget called 'Miscellaneous'. According to Kate:

In a zero-based budget, you account for things that you normally just "leave to fate". Your gas for example, running money for the week and that $5 to buy the latest issue of Cosmo or Maxim or whatever it is that adorns your coffee table. In this type of budget, you list everything and I mean ev-er-y-thing.

Read Kate's words of financial wisdom here.