Find the Starting Line: Not sure how to design your first budget, look no further! In this issue we have your back. We are going to show you 6 crucial categories that are simple and vital for every budget’s success. By the end of this issue, anyone should be able to easily identify the essential spending categories in your life.

Survey says: Dog owners are 11% more conscientious than cat owners which may be an indication they are better at personal finance. On the other hand, cats supposedly guard the gates to the underworld. Read into that what you will.

Here’s what’s in store today Hoot squad:

👍 6 essential categories for every budget
📝 Easy to identify signs to add more detail to your budget
👌 Budget examples to get you started
🤷‍♀️ What’s up for next week

The Big Six: Your Crucial Budget All-Stars

When selecting what to track in your budget, it’s best to start small and then expand by breaking categories out into more detail over time.

For your first budget, simplicity = success. Here are the top six categories that’ll keep your spending on track and your stress levels low:

1. Housing (25-35% of income)

The roof over your head deserves its slice of the pie. This covers:
🏠 Rent/mortgage payments
⚡ Utilities (electricity, water, internet, internet - because the most important things are worth saying twice.)
📋 Property taxes or, if you rent, renters insurance

💡 Pro Tip: If your rent is eating more than 35% of your income, you might want to move to a less expensive neighborhood or find a roommate who likes splitting bills and the occasional pizza.

2. Transportation (10-15%)

Whether you’re cruising in your Honda or hopping on the green line, getting around ain’t free:
🚗 Car payments, insurance, and gas
🛠️ Maintenance (tires, oil changes, or that weird sound your car makes)
🚌 Public transportation passes

💡 Pro Tip: If you work remotely, give your transportation budget a makeover and allocate those savings to something fun. Like a houseplant or perhaps a $6 coffee and $8 dollar muffin at the local coffee shop?

3. Food (10-15%)

Everybody’s gotta eat, but it doesn’t have to break the bank:
🥑 Groceries (hello, meal prep goals!)
🍔 Dining out (keep the DoorDash deliveries under control!)
☕ Coffee (it’s a lifestyle, not a luxury)

💡 Pro Tip: That daily $6 latte adds up to $180/month, lean into home brewed drinks instead. A bag of coffee costs $4-$8 and can last a week!

4. Savings (20%)

Future-you says THANK YOU with a medal and hearty handshake for putting money away:
💰 Emergency fund (3-6 months of expenses = peace of mind)
🎓 Retirement accounts (401(k), IRA—don’t sleep on compound interest!)
🚀 Big goals (vacation in Bahamas or a down payment on your dream home)

💡 Pro Tip: Automate savings so you’re not tempted to "forget" this category when you see something shiny.

5. Insurance & Healthcare (5-10%)

Nobody likes thinking about this stuff until they need it:
🩺 Health insurance premiums & out-of-pocket costs
🚘 Auto insurance (required, unless you like living dangerously)
🛡️ Life insurance (future-proofing your loved ones, you know how you drive)

💡 Pro Tip: Compare plans yearly—you might save enough to cover that $50 gym membership you don’t use.

6. Fun Money (10-15%)

All work and no play makes budgets... unbearable. Enjoy your hard-earned cash:
🎟️ Entertainment (movies, concerts, sports games)
👗 Shopping (because those sneakers and matching ball caps won’t buy themselves)
🛍️ Subscriptions (streaming, gaming, or your “monthly mystery box” addiction)

💡 Pro Tip: Guilt-free spending is the reward for sticking to your budget. Go ahead, book that trip, just don’t YOLO your entire life savings.

BIG Signs That Scream: “I Need More Categories!”

🛠️ The one question to ask before expanding your budget categories

Does My Budget Provide Useful, Actionable Data?

Tracking your expenses isn’t just about cutting back—it’s about gaining clarity. Here’s how it helps:

• Spot Hidden Costs:

  • Uncover sneaky expenses like forgotten subscriptions or daily coffee runs.

  • Decide if these costs are really worth keeping around.

• Weigh Time vs. Money:

  • Evaluate if extra hours at work are worth the trade-offs, like lost family time or energy.

  • Look for opportunities where your time and money can create better returns elsewhere.

🚦 Signs You Need More Categories

1. You Keep Blowing Past Your Budget
   If your "Miscellaneous" category looks like a black hole where all your cash disappears, it’s time to dig deeper.

   • Fix: Split it up. Dining out? Concerts? Impulse Amazon hauls? Give them their own line items.

2. You’re Missing the Big Picture
   If “Transportation” includes gas, car payments, and Uber rides, you might be missing overspending trends.

   • Fix: Break it down. Are you paying too much for car insurance or treating Ubers like a private chauffeur?

3. Life’s Got Layers
   New hobbies, a side hustle, or a shiny new gym membership? If your life gets more complex, so should your budget.

   • Fix: Add categories for each big life shift, like “Business Expenses”, “Self-Care”, or “that obligatory gift for that cousin you’re supposed to like”

4. You’re Hitting Goals Too Slowly
   Saving for a vacation, a new laptop, and your emergency fund in one giant "Savings" category? Good luck tracking that.

   • Fix: Create buckets for each goal. Watching your “Italy 2025” fund grow is way more motivating.

🚀 Pro Tip: Your budget categories should work for you, not confuse you. Too vague? Add more detail. Too detailed? Consolidate. The goal: clarity and control.

🧩 Bottom Line: If your budget isn’t helping you make smarter money moves, it might not be you—it just might be the setup. Adjust it until it feels like a perfect fit for your life, not a financial straightjacket.

It takes time to get it right. Be comfortable with new iterations.

Budget Examples - Simple and Complex

To help you launch your first (or latest) budget like a coyote wearing rocket skates, the team here at Money Hoot has put together two sample budgets: The 6 Essentials Budget and a typical Expanded Sample Budget.

If you want to use ink and quill for your budget because you like to go at it old school, here’s a few screen shots to get to started.

For everyone else, we will be putting up a link on MoneyHoot.com at the end of our budget series providing access to both Excel and Google Sheets versions of these spreadsheets. So keep an eye out!

The Six Essentials Budget Worksheet

The Expanded Category Example Worksheet

What’s Up Next Week

That’s it, gang. Budgeting isn’t about deprivation—it’s simply about directing your dollars to the life you actually want.

Next week’s article will continue in this budget series with:

The Best Plug-in-Play Budget Tools and Templates!

We want to keep things light and helpful so if you wouldn’t mind tell us how we did today in the article but replying to the email.

If there are certain topics you would like to hear more on let us know!

Stay rich (in spirit and dollars)!

-Hoot Squad