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3 Budget Category Setups for Beginners

How to plan for unexpected expenses and become a master of saving money

Budgets are often associated with boring stuff like spreadsheets, receipts, and “belt-tightening.” As we all now understand, belts are unnecessary and so is negative baggage about budgeting. Imagine if you could stop stressing about your bills or wondering where all your money is going? Yep, you can make progress on your financial goals, and the first step is creating a budget category setup that makes sense to you.

Budget category groups are how you organize your expenses. Since it’s the first place to start when creating a budget, we’re offering some sample categories and category groups to see what resonates with you.

A budget category setup shown in YNAB. Make your categories reflect your life!
A budget category example setup shown in YNAB. Make your categories reflect your life!

1. The Mandatory & The Optional

Are you a hard-nosed budgeter who’s ready to get tough on those optional expenses that are causing financial distress? No? But you think someone in charge of your bank account probably should? Then consider this approach: create one category group for mandatory spending and one for optional stuff like your daily cinnamon bun (no one said this was going to be easy).


  • Rent
  • Phone
  • Groceries
  • Gas
  • Electric bill


  • Vacation
  • Eating out
  • Movies
  • Daily cinnamon bun

It’s worth noting that this may seem set in stone, but it’s not. You could move and possibly lower your rent. You could shop at different stores and buy less expensive food to lower your grocery bill. But for some people, this is a good starting point to understand what spending is necessary each month.

Note: Optional doesn’t mean you can’t or shouldn’t do it. Your budget just helps you understand what you need to spend each month so you can decide what to do with the rest.

This might be good for:

  • An overwhelming financial situation.
  • Folks who are starting with very little money.
  • Someone who wants to start simple.

2. The Themed Budget

This is perhaps the most common approach to your budget category setup: group your expenses by theme. For many people, this just makes sense. It’s like when you make a packing list for a trip, you list your toiletries together.

The advantage of the themed budget is that you can easily assess what the different areas of your life cost and make sure everything is aligned with your financial goals.


  • Mortgage
  • Homeowners insurance
  • Yard maintenance


  • Car payment
  • Gas
  • Car insurance


  • School supplies
  • Clothing
  • Extracurriculars
  • Books/toys


  • Dog food
  • Cat food
  • Dog medical
  • Cat medical
  • Pet therapist to mediate dog/cat disputes


  • Cleaning supplies/house cleaning
  • Artwork/decoration
  • Furniture
  • Streaming/cable subscriptions

This may be good for:

  • People who want a clearer understanding of where their money is going each month.
  • People in a relatively stable financial situation, who are wishing to optimize their personal finance practices so that, someday, they’ll have enough retirement savings.

3. Pin it to the Paycheck

Are you trying to break the paycheck-to-paycheck cycle? But you keep getting surprised and knocked off your game with unexpected expenses?

Create category groups that tie expenses to the paycheck that will be covering them. No more hoping and nervously waiting until payday. By planning ahead for your fixed expenses and reserving portions of your paycheck, you’ll know you’re covered.

Tip: add in the date due to the category name for extra clarity and confidence.

Paycheck 1 (Big, fixed expenses)

  • Electric
  • Internet
  • Car payment
  • Student loan

Paycheck 2 (Big, fixed expenses)

  • Rent
  • Phone bill
  • Health/dental premiums

You’ll want to account for your everyday expenses so you know how much you can really afford.


  • Gas/transportation
  • Groceries
  • Dining out

There are also non-monthly expenses that you pay every year but might’ve forgotten to budget for ahead of time. By entering those purchases into your budget you’ll smooth out the rollercoaster of expenses that normally arises around the holidays and vacation.

Instead of a surprise credit card bill after December 25, you’ll make 12 smaller contributions throughout the year. Part of your brain will finally be able to relax because you’ll know that there’s enough cash when it’s time to pay. (Sorry credit card companies, collect your interest elsewhere!)


  • Holidays
  • Subscriptions
  • Car registration

This might be good for:

  • Someone starting out without a lot of money.
  • A budgeter who’s tried the 50/30/20 budget approach, but is looking for a better way to keep track of expenses within the month.
  • Anyone trying to get ahead of credit card bills or debt repayment.

At the end of the day month, the best structure is the one that makes sense and inspires you. Your budget category should feel right for you, just like a favorite T-shirt.

It’s important to remember that budgets are meant to be changed and improved upon as your life and financial goals invariably change. And with YNAB, our app makes it super easy to edit your budget categories and structure, or start fresh with new categories (see how to create a template that works for you!). People have started using YNAB as college students, then continued as they started families and saved for retirement. We’re here for the lifecycle, people.

If you want to try out some budget categories with YNAB, and join the hundreds of thousands of budgeters who’ve brought order and focus to their financial lives, start your 34-day trial today.

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3 Budget Category Setups for Beginners