When you create a budget, you’ll find that certain expenses come up again and again. If you want to take control of your money, it’s important to identify these monthly expenses and plan for them in advance.
Managing monthly expenses plays a big role in your long-term financial success. Read on for some helpful tips on managing your monthly expenses, reducing them, and taking the stress out of the process.
Types of monthly expenses
The expenses you include in your household budget typically fit into one of two categories: fixed or variable. As you , it’s helpful to split expenses into these categories to make planning easier to manage.
Fixed expenses
Fixed expenses are financial obligations that do not change from month to month (or, in some cases, year to year). Examples of these types of bills might include rent or mortgage payments, car payments, insurance premiums, or homeowners’ association dues.
Variable expenses
Variable expenses are costs in your budget that may fluctuate on a monthly, quarterly, or yearly basis. Some examples of these types of expenses include , electricity bills, and gas.
List of monthly expenses to include in your budget
As you create your monthly budget, it’s important to include the right expenses in your spending plan. If you don’t account for all of your expenses, it could lead to overspending, debt, and other potential issues.
Consider looking over your bank and credit card statements for the last few months to see how you’ve been spending your money. In the meantime, the list of common monthly expenses below could be a good starting point.
1. Housing
If you’re like most people, housing is likely the biggest expense in your monthly budget. According to the National Association of Realtors, the average mortgage payment in Q1 2024 was $2,037. Meanwhile, Zillow reports that the median rent payment in the United States is $2,118.
On top of a monthly mortgage or rent payment, you may also need to include the following types of expenses in the housing category of your budget.
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Insurance premiums (homeowners or renters insurance)
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Homeowners’ association (HOA) dues
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Property taxes (if not included in monthly mortgage payments)
Keep in mind that some expenses may not come out of your budget on a monthly basis. But for large expenses, like taxes or HOA dues, you may need to set aside money in savings each month so you’re prepared to pay those bills when they come due.
2. Food
Another significant expense to add to your monthly budget is food. Because grocery and dining expenses are variable (as in, they fluctuate), they can be more challenging to predict when it comes to your budget. Nonetheless, it’s important to plan ahead for grocery and dining spending.
Per the U.S. Department of Agriculture, the average U.S. household spent between about $424 and $1,309 on food each month in 2022 (the most recent figures available). But if you’re looking for a more accurate estimate of how much you spend on food each month, reviewing previous bank and credit card statements should give you the details you need to make an educated estimate.
3. Transportation
Transportation expenses include money you spend to get back and forth to work, school, and other errands throughout the month. The amount you need to budget within this category could vary greatly depending on whether you own a car (and, if so, the type of vehicle you drive), how far you commute, if you work from home, and other details.
Car payments, for instance, are a common part of many household budgets in the United States. If you have this type of credit obligation, you’ll want to account for it in your monthly budget.
According to Experian, nearly 80% of consumers who purchased new vehicles in 2023 relied on an auto loan to make their purchase. Close to 40% of those who bought a used car relied on financing as well. For new car buyers, the average car payment in 2023 was nearly $740. Used car buyers paid an average of $530 per month by comparison.
Below are some common transportation-related expenses for which you may need to budget:
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Car payment
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Car insurance premiums
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Gas
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Vehicle maintenance savings (e.g., oil changes, tires, repairs, etc.)
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Public transportation fees
It’s worth noting that the transportation category of your budget often represents a mix of both fixed and variable expenses. While your car insurance premium may stay the same each month, for example, the amount you pay for gas and maintenance could fluctuate. So, it’s helpful to look back at previous spending patterns and use this information as a guide to plan ahead.
4. Utilities
Utilities is another category you should be sure to include in your monthly budget. This category often includes a mixture of fixed and variable expenses as well.
The U.S. Energy Information Administration says the average 2023 monthly electric bill for U.S. residential customers was $138. But the amount you pay for electricity and other utilities can vary greatly based on your location, the time of the year, the size of your home, and other factors.
If you’re not sure how much to set aside for a particular utility bill, consider budgeting on the high side to be safe. You can always save any extra money for future expenses if a bill winds up being lower than you anticipated.
Here are a few common utility bills you might need to include in your monthly budget:
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Electricity
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Water, sewer, and trash services
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Heating services (e.g., natural gas or propane)
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Mobile phone
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Internet
5. Debt payments
You should also be sure to make space in your budget for monthly debt payments. This category should include any payments you’re making toward any of the following financial and credit obligations that aren’t already listed above:
Keep in mind that even if you can’t afford to pay off all of your debts at once, creating a debt-elimination plan could work in your favor. As you reduce your debt — especially high-interest balances like credit cards — you could save money and potentially as an added perk.
6. Childcare
As a working parent, may be another major expense that you have to fit into your monthly budget. A recent survey from Care.com finds that the average cost to enroll an infant in a licensed day care is $16,692 per year or approximately $1,391 per month.
7. Entertainment and miscellaneous expenses
If possible, don’t forget to leave a little room in your budget for some fun. Even if money is tight or you’re working to pay down debt, it can be a good idea to leave yourself some wiggle room for the occasional treat (as long as you’re responsible and don’t go overboard).
This section of your budget may include optional monthly subscriptions such as television or music streaming services, audiobook subscriptions, gym memberships, or home security services. Miscellaneous expenses such as money for haircuts, events, and other random expenses could fit into this category as well.
8. Savings
It’s important to make saving money a regular part of your monthly budget. If you don’t include as a monthly “expense,” you’re less likely to reach important financial goals.
In the beginning, you might start out with small savings goals, such as working toward an or making small contributions toward your retirement account. As you pay off debt and become more financially stable, you may find yourself in a position where you can put aside more money in the future.
Tips to reduce monthly expenses
Once you have a list of personal monthly expenses, it may be helpful to go through your budget and look for ways to save. There are numerous ways to budget your money, but the key to success with each approach is spending less than you earn.
Freeing up money in your budget could help you find more money to use for savings, paying off debt, or other financial goals. Below are some helpful tips on how to reduce your monthly expenses.
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Refinance: If you have , you might consider applying to refinance high-interest debts and save money on interest where possible. Getting a lower interest rate on a car loan or mortgage or consolidating credit card debt with a personal loan or are all potential ways to save and perhaps even pay off your debt faster. Just be sure to do your research before you take out a new loan or credit card. There are pros and cons to consider with any new type of financing.
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Comparison shop: When it comes to insurance, mobile phones, and other services, it’s important to compare multiple providers — not only when you first become a customer but on a regular basis. Shopping around for the best price on car insurance, for example, can help ensure you have the coverage you need at the best price. And although it’s a bit of a chore, it’s wise to compare car insurance rates each time your policy is up for renewal.
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Cancel subscriptions and memberships: Consider canceling unused subscriptions and memberships, along with those you can live without, while you’re trying to accomplish other financial goals. Keep in mind that you may be able to enjoy free versions of music and TV streaming services as well. Apps such as Libby and Hoopla will let you check out free ebooks and audiobooks from your local library. Meanwhile, you might consider finding free ways to work out instead of paying for a gym membership — at least temporarily.
Next steps
Learning to control your monthly expenses doesn’t happen overnight. But as you practice this good financial habit, it should become easier with time.
Remember, a budget doesn’t have to be a tool of restriction. It’s meant to be a plan that helps you accomplish the financial goals that matter most to you.