A solid budget can help you take control of your spending — making sure you have enough to pay your bills, grow your savings, and enjoy life along the way. 

The first step is to set up your budget categories so you can see where your money is going. 

This guide runs through 10 essential categories found in most household budgets, including how much the average household spends on each one.

Top 10 budget categories

All monthly budgets start with your take-home pay — the money you bring home from your paycheck after taxes, retirement savings, and other deductions are taken out. 

According to the US Bureau of Labor, the average American salary is $53,490 per year, but that’s before taxes. 

After federal and state income taxes, that leaves about $42,768 — or $3,564 per month.

If you live in a state that doesn’t have any income tax, you’ll have a bit more to work with, but we’ll use $3,564 as our monthly average.

The essential budget categories

This first list of budget categories covers the essentials, like housing, food, and clothing. The recommended amounts are based on our average budget of $3,564 per month. 

Adjust those numbers up or down to fit your actual take-home pay and your unique situation. 

1. Housing (25-35 percent)

Amount per month: $891 to $1,247

Housing covers the money you pay to keep a roof over your head. This includes everything from rent or mortgage payments to property taxes, HOA dues, and home maintenance costs. 

For most budgeters, this category is by far the biggest. 

2. Transportation (10-15 percent)

Amount per month: $356 to $535

Regardless of your location or lifestyle, everyone needs to get from point A to point B. Typically, this budget category includes car payments, registration and DMV fees, gas, maintenance, parking, tolls, ridesharing costs, and public transit. 

If you don’t need a car, you’ll save a lot of money here that you can use somewhere else instead.

3. Food (10-15 percent)

Amount per month: $356 to $535

Shopping and cooking at home? Sampling local restaurants? Either way, we all have to eat. Many budgeters include both groceries and dining out in this category (e.g., restaurant meals, work lunches, food delivery, etc.) 

To stretch your food budget further, try moving some of your non-essential food expenses (like gourmet coffee or celebration dinners) into one of the non-essential categories below.

4. Utilities (5-10 percent)

Amount per month: $178 to $356

This category covers the services that keep your home up and running — things like gas, electricity, water, and sewage bills. Some families also include “connectivity” services, like internet and cell phone bills.

When you’re setting your budget, remember that the costs of heating and air conditioning often change from month to month. A home in Syracuse, NY, will have a bigger heating bill in the winter than one in Austin, TX, but that same home will pay less in the summer. 

5. Insurance (10-25 percent)

Amount per month: $356 to $891

Some budgeters like to include insurance with the thing they’re insuring. So auto insurance would fall under Transportation, and homeowner’s insurance would be included in Housing. 

Both systems are perfectly valid. Do whatever helps you feel most organized.

If you list insurance as its own category, this could include:

  • Health insurance (if you pay it out of your take-home pay)
  • Homeowner’s or renter’s insurance
  • Auto insurance
  • Life insurance
  • Disability insurance

6. Medical & Healthcare (5-10 percent)

Amount per month: $178 to $356

“Health is wealth,” so be sure to include enough in your budget to cover these costs. If you plan for essential medical care such as yearly physicals and dental appointments, you’re much more likely to live a long, healthy life.

As you build your medical and healthcare budget, think about:

  • Out-of-pocket costs for primary care
  • Specialty care (dermatologists, psychologists, etc.)
  • Dental care
  • Urgent care
  • Prescriptions and OTC medications
  • Supplements and vitamins
  • Medical devices and supplies

If you don’t have a separate budget category for insurance, remember to include any health insurance premiums that you pay out of your own pocket.

7. Saving, Investing, & Debt Payments (10-20 percent)

Amount per month: $356 to $713

This often-overlooked home budget category is one of the most important — including it can really set you up for financial health down the road. 

Start by using it to pay off any high-interest debt you’re carrying, such as credit card bills or even personal loans and student loans.

Once you’re free of any high-interest debt, you’ll want to build an emergency fund that’s earmarked for unexpected disasters, as well as saving in a retirement account such as a 401(k) or IRA. 

If you’re saving a full 20 percent of your income and you aren’t making a significant dent in your debt, try cutting back in other areas, starting with your non-essential spending categories.

The non-essential budget categories

Once you’ve budgeted for your essential needs, the money you have left can go toward the non-essentials — like entertainment.

Non-essential expenses tend to vary from month to month, depending on your spending habits. 

They’re also the easiest expenses to cut back on, at least for a while — especially if you want to pay down debt or build your savings more quickly. 

8. Personal Spending (5-10 percent)

Amount per month: $178 to $356

This category is a catch-all for things like: 

  • Gym memberships 
  • Clothes and shoes
  • Haircuts and highlights
  • Home decor and furniture
  • Gifts

You might consider some of these to be essential, and that’s perfectly fine. The point isn’t to tell you how to spend your money. The idea is that anything in this list could be canceled if it had to be — in case of a real emergency.

9. Recreation & Entertainment (5-10 percent)

Amount per month: $178 to $356

For most of us, carving out some time for fun — and the money to afford it — is essential to maintaining a healthy work-life balance. 

A good budget helps you spend your money where it matters most to you. So enjoy it however you want to — you’ve earned it!

This budget category can include things like:

  • Concert tickets
  • Sporting events
  • Family activities & vacations
  • Cable, streaming services, and other subscriptions (e.g., Hulu and Netflix)
  • Restaurants (if you didn’t include this under “Food”)
  • Video games
  • Hobbies

10. Miscellaneous (5-10 percent)

Amount per month: $178 to $356

This category is reserved for anything that isn’t covered in the rest of your budget categories. It can also be used as an “overflow” category when you need a little extra somewhere else.

For example, if you have a larger family, you probably spend substantial amounts on clothes and haircuts for your kids. If you’ve maxed out your personal spending for the month and you find a jacket you love, you could account for it under Miscellaneous. 

Remember, these categories are just a starting point. Tweak your budget as much as you need to until it fits your needs.

If you want to explore other categories, try these 20 average monthly expenses.

Having a hard time making ends meet?

If you’re struggling to cover your financial bases, you’re not alone — making ends meet can be tough. Start by cutting back on non-essentials wherever you can, and don’t forget to explore other ways to make money.

Remember to pay off high-interest debt wherever you can — high credit card balances can really squeeze your budget. Slowly but surely, smart budgeting pays off. 

Your budget categories & percentages: Putting it all together

If building a household budget sounds like a lot of work, you’re not wrong — especially since you have to keep up with your spending every day. 

To make it easier, consider using the Quicken Simplifi app. It includes every one of these categories along with several more — plus sub-categories to give you a detailed picture of your spending without all the work:

  • Gifts & Donations
  • Kids
  • Pets
  • Travel
  • Education
  • Taxes
  • Business Services

But the best thing about Simplifi is that you can choose how you want to budget. You can plan out every dime, or just check out what you’ll have left after your monthly bills and savings.

Simplifi does the math for you and keeps up with what you have left automatically — so you can spend your “available to spend” money on anything you want.