What are examples of monthly expenses?

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Creating a monthly budget is one of the most basic steps you can take to manage your money and make sure that you stay on track to meet your financial goals. To create a budget, though, you need to have an idea of what your monthly expenses are. You also have to make sure that your expenses don’t exceed your monthly income so that you can pay all your bills — and save some money, too.

This list highlights some of the most common monthly expenses to factor into your budget:

1. Housing

Your housing expenses are likely your single-largest budget item. This includes your monthly mortgage or rent payment depending on whether you own or rent your home. It also includes any other  extra costs that you must pay to maintain and use your home. If you own your home, for example, then you’ll have to pay your property taxes if you live in a state that has a property tax. Your property tax is likely escrowed as part of your house payment, so you shouldn’t include it as an extra amount if you’re already recording the full amount in your mortgage payment.

You’ll also have to pay for home maintenance, such as plumbing fixes, landscaping, gutter cleanings and an occasional fresh coat of paint. You’ll need to estimate your maintenance costs to put them in a budget since all of those are likely not fixed recurring amounts each month.

If you rent, you’re likely not responsible for maintenance, repairs or property tax so you wouldn’t need to include a separate amount for that. So just include the rent amount.

Since housing is such a large part of your budget, it’s important to manage it and not take on more house than you can afford.

2. Food

Your monthly food expense includes everything that you spend on eating. Whether it’s a home-cooked meal, pizza delivery or upscale dining. Again, you may need to estimate your food expenses from month to month. One way to do that is to simply average your food expenses over the past year

Fortunately, you can control your food expenses to a large degree. If you need to trim your budget, food is likely a good place to start. Cutting back on takeout and limiting how often you go out to eat at your favorite restaurants can help you spend less money and stick to your budget.

3. Transportation

Transportation costs include anything you spend on travel. This includes your monthly car payment whether you lease or have a loan on a vehicle. It also includes the insurance on your vehicle. If you use public transportation to commute to work or just get around town this would be included here as well.

Don’t forget to include any smaller additional transportation-related expenses, such as parking fees or  routine maintenance like oil changes or new tires. It may make sense to include these periodically at full cost in your budget instead of including a portion of the expense each month since that is how you will pay for them.

4. Childcare and pet care

If you have children or pets, you probably can’t take care of them yourself all the time. You may have to pay for someone else to look after them so you can run errands or go to work or school. If your child attends a regular daycare, then you would include the monthly tuition cost for him or her to attend. If it’s the occasional babysitter you hire so you can grab dinner out or visit friends, then you’ll want to estimate your monthly cost.

For pets, don’t forget about veterinary bills and food.

5. Cell phone

Your cell phone bill is another standard monthly expense. This one is straightforward to track because you receive a monthly bill.

6. Health insurance

Health insurance costs will vary from person to person, but your premium will generally only change once a year so you can budget based on a consistent monthly expense. If you have health insurance through your employer, then your employer is covering a portion of your premium. You only want to include the portion you pay in your budget since that’s all you are responsible for.

Keep in mind you may have copays or deductibles that aren’t included in your premium. You may want to set aside an amount each month to cover these added expenses, so you aren’t in a bind when you have to pay an unexpected visit to a doctor’s office or emergency room. A health savings account is a good way to do that.

7. Debt

The monthly expense related to debt is not the debt balance itself, but the payment on the debt balance. This could be payments on anything, such as credit cards or a personal bank loan.

Depending on how you categorize your expenses, you could include car or house payments here, but make sure that you are not double-counting them if you include them as transportation or housing expenses.

8. Savings

Savings should be a regular part of any budget, so including a monthly savings “expense” is a good way to make sure you don’t forget about setting some money aside. Saving shouldn’t be an afterthought. Build into your budget some of the money you have left over after paying for other expenses. According to the 50/30/20 budget rule, you should set aside 20 percent of your income for savings.

Different types of savings buckets might be money you put in a savings account, an emergency fund or retirement account.

9. Entertainment

Entertainment expenses are related to anything you do for enjoyment. This could be money you spend on hobbies, movie nights, travel or going to sporting events.

It’s easy to dismiss entertainment as a monthly expense item. But if you don’t build this discretionary spending into your budget, you can easily start to overspend here.

How to create a budget

To create a budget, start by listing out all your monthly expenses, including some additional ones that aren’t listed above.

Next, list your income on your written budget so that you can compare your expenses to your income. Make sure your expenses are comfortably below your income. You want to leave adequate wiggle room in your budget so that extra unplanned expenses don’t cause you to stress about whether you’ll be able to afford something you need or make your mortgage payment.

Once your written budget is complete you need to track your actual expenses each month and compare to your budgeted expenses. This is a great way to find out if you really spend money where you think you do. When you discover discrepancies between your budgeted expenses and your actual expenses, you either need to adjust your budget or spending. Completing this process helps you work through your finances and reveals opportunities to make simple yet impactful improvements.

Bottom line

Creating a budget is a valuable tool for keeping your finances in order. Knowing what your monthly expenses are is critical for sticking to a budget that reflects your financial situation accurately.

Take the time to write out your budget and monthly expenses so you can stay on track.

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