Budgeting is closely related to budget categories. For those of you who have just started budgeting to better manage finances and are still confused about what budget categories should be, you can start with these 5 basic ones.
Started Budgeting? Try These 5 Budget Categories
Paying bills, whatever they are, on time is very important. If you pay late, the service you use can be temporarily stopped, not to mention the fine that must be paid. If you are late paying credit card bills, several consequences await.
Everyone's bills may be different, depending on needs. Examples of common bills are rental, internet, electricity and water bills.
2. Shopping for daily necessities
Shopping for daily necessities is an inseparable part of life. In addition to groceries, you also shop for daily necessities such as toilet paper, cooking gas and gallons of water, for example.
For shopping for daily needs, you can allocate a budget every week, every month or based on your shopping habit.
The next budget category that is no less important and needs to be separated is transportation. You may take public transportation to get to work and back home. If you use a private vehicle, you can estimate the cost of gasoline in a month and vehicle maintenance to be included in the transportation category.
Don't forget to set aside money for savings, Jagoans. It is important to have emergency savings because it can help you deal with unexpected situations right away. Saving for retirement is also a good thing to start as soon as you start earning money if you want to retire comfortably without burdening your family members.
In addition, you may have a number of financial goals that you want to achieve in the short and long term. If you do, then you need to list what your financial goals are and set aside money for each financial goal.
5. Entertainment and self-reward
Why work hard if you don't enjoy the results, right? So, of course you can allocate a budget for entertainment and self-reward. But, you need to prioritize the budget for the four categories above. The rest of your money can be used for entertainment and self-reward.
Entertainment and self-reward cannot be equated with daily needs. Watching a movie at the cinema or having dinner at a fancy restaurant once a month can be categorized as entertainment. Buying a new pair of shoes that you've been wanting for a long time can be considered a self-reward.
You can also define the rules for using money for self-reward. For example, if the saving target is reached on time, you can reward yourself. This way you will become more disciplined and encouraged to save.
Practical Budgeting? Try It In the Jago Application
So that budgeting is no longer manual, you can do it in the Jago application. You can create a Pocket for each budget category. The Jago application has the Spending Pocket and Saving Pocket features.
The cool thing is, you can further separate each budget category. For example, you have three kinds of monthly bills that need to be paid. You can create 3 Spending Pockets for these 3 bills, instead of just 1 Spending Pocket.
It's the same for the Saving Pocket. If you want to build an emergency fund, save for retirement and save for your wedding, for example, just create 3 Saving Pockets.
By having lots of Pockets for various needs, it will be easier for you to allocate a budget and monitor whether everything is going according to plan.
Start budgeting by creating the 5 simple budget categories above to have more organized finances. The Jago application can be downloaded here for those who don't have it yet.