15 monthly expenses to include in your budget

If you’re like most people, you pay certain expenses every month—everything from housing and transportation to groceries and internet. Creating a budget can help you do a better job of managing those expenses.

When you have a budget, you can get a big-picture view of your finances over time. You know what’s coming in and what’s going out, which can help you create financial stability. Although creating a budget may sound a little complicated, you may just need to know where to start. 

What you’ll learn:

• Creating a budget can be a simple and effective way to plan for your monthly expenses and help put yourself in a better financial position.

• Knowing where you spend your money can help you cut unnecessary expenses and save for your future financial goals.

• Monthly expenses typically fall into one of two categories: fixed and variable.

When organizing your expenses, you’ll want to put them in easy-to-manage categories. For example, some of your payments won’t change from month to month—they’re known as fixed expenses. And some will vary, so they’re known as variable expenses.

Here are some more details about fixed and variable expenses.

Fixed expenses don’t change. They often occur monthly and include bills such as rent, mortgage or car payments. But fixed expenses can also be due quarterly or annually. These types might include HOA payments, insurance payments and professional association dues. No matter how often you pay fixed expenses, their regularity can make them easier to budget for.

Variable expenses can be monthly too. But they change regularly, which can make them harder to track and plan for. That’s where budgeting can come in handy. It can help you see what you pay over time in variable expenses and make changes as necessary. 

Examples of variable expenses include groceries, utilities, gas, dining out, clothing and personal care.

Creating a budget can help you start to gain control over your finances, get out of debt and plan for the future. The first step is knowing which bills to include in your budget so you don’t spend more than you make. 

Common expenses to build into your budget include:

According to the U.S. Department of Labor Statistics, housing accounted for the largest share of annual spending by consumers in 2023. Housing costs typically go beyond a mortgage or rent payment and can include insurance, maintenance and property taxes. 

Property taxes are generally part of a mortgage payment, so homeowners likely won’t need to add them to their budgets. Other expenses like maintenance need to be added to your budget and paid separately.

Utilities are another important expense related to housing. The average cost of utilities may vary from month to month depending on use. Here are types of utilities you might include in a budget.

• Heating: Whether you heat your home with oil, gas, propane or electricity, staying warm can be a major monthly expense. Using energy-efficient products and sealing off leaks in windows and doors can help keep costs down.

• Cooling: Window air conditioning units and heat pumps can also drive up your monthly utility expense. Closing vents in rooms that aren’t in use could be one way to reduce cooling costs. So can doing things like installing ceiling fans and sealing leaks to make your home more energy efficient. 

• Electricity: Electricity is another utility that many people pay monthly. Using energy-efficient appliances can help reduce electricity costs. So can keeping the thermostat set lower in cold weather and higher in hot weather. Turning off lights when they’re not in use could also help.

• Water and sewer: Water is another utility that can vary in cost, depending on use and base rates. Taking showers, running the dishwasher, doing laundry, watering your lawn and flushing your toilet can all contribute to the cost.

Whether you own a vehicle or use another type of transportation, you’ll want to include those costs in your budget.

If you own a car, you may need to add a car loan payment and auto insurance to your budget. The same goes for maintenance costs such as inspections and oil changes.

If your car runs on gas, that’s another expense to add to your budget. The price of gas can fluctuate, depending on the economy and the type of vehicle you drive. A smaller car can generally be more economical than a larger car, SUV or truck.

If you use public transportation, you should include costs like bus tickets, train tickets and fares for ride-booking services. You’ll also want to add other transportation-related costs to your budget such as parking expenses and tolls.

These costs can vary depending on a range of factors, including the size of your household. For example, a large family will generally cost more to feed than a couple. These types of purchases can be a great place to start when you’re trying to trim expenses.

Cellphone costs can depend on the type of phone you have and the plan you’re on. If you opt for the latest-and-greatest phone, you’re adding to your costs. The same can happen when you exceed your data plan. To save money, you could consider things like buying a more basic phone and switching to a limited data plan.

Internet and cable are other items you’ll want to add to your monthly budget. Providers sometimes bundle the two—and may also include landline phone service—so bundling could be a way to save money.

Other recurring payments to add to your budget can include things like gym memberships, magazine subscriptions and entertainment streaming services. These expenses are generally fixed and can be canceled if you need to cut costs. But they can be difficult to track if you’re constantly adding to them. In that case, Capital One’s subscription management tools could help.

Like housing, health care can be a major monthly expense. To help contain costs, you could start by getting familiar with the specifics of your health insurance policy—your premium, deductibles and copayments, for example. It could also help to balance the coverage options you choose with your take-home pay.

If you drop your children off at a day care center or use a nanny, you’ll need to account for that expense in your budget. Although child care is considered a fixed expense, the cost can vary in certain situations. Those can include price increases or additional charges for things like late pickups. Finding child care when centers are closed or nannies are unavailable can also add to monthly costs.

If you’re a pet owner, your budget should include the cost of pet food, veterinary bills and pet sitting. It can also include the cost of pet insurance, if you have it.

Setting aside money for an emergency fund may seem ambitious, especially if you don’t have much money to save. But budgeting even a small amount toward a fund each month can add up. Experts like the Consumer Financial Protection Bureau (CFPB) recommend having enough saved to cover expenses for at least three months.

Loans and credit card debt, which fall into this category, typically have a minimum balance due. You’ll want to add at least that minimum payment to your budget. 

When it comes to credit cards, you could be adding to your debt with interest charges if you’re only paying the minimum each month. And as with all bills, late payments could result in fees.

While retirement might feel far off, thinking about it now could help in the long run. For example, you may want to invest in some type of retirement savings plan. Or if you already have a plan and your deductions aren’t working with your budget, you might consider your options and whether your deductions are at the right levels.

Another benefit to budgeting: It can make it easier to plan for large purchases. Buying a house, for example, is likely one of the biggest purchases you’ll ever make. Budgeting could help you save for a down payment now and to make monthly payments later. 

Whatever big purchase you have in mind, budgeting can help relieve some of the stress of working toward your goal.

There’s no doubt about it, traveling can be expensive. It can involve all kinds of costs, including flights, hotels, rental cars, tours, excursions and meals. For that reason, you may want to include travel in your budget and save a bit each month toward your goal. 

A Capital One travel credit card can be a good way to earn rewards on your purchases. You can also learn about how to plan a trip without blowing your budget and research cheap vacation spots.

When you budget, you may want to make room for fun alongside the necessities. And planning for nights out at the movies, restaurants and other fun places could help you identify other expenses you might cut back on to make up the difference in your budget.

If you’re buying tickets to see your favorite band or sports team, you could consider using Capital One Entertainment. Eligible cardholders can earn elevated rewards and access exclusive benefits.

Once you’ve identified your monthly expenses and created a budget, it’s important to implement it. By following and updating your budget as needed, you could put yourself in a better financial position for the long term. 

Consider incorporating these tips from the CFPB into your monthly financial planning.

• Review your monthly expenses and update them as necessary. This can help you reach your long-term goals.

• If you spend unnecessarily, don’t let it derail your budgeting and financial planning. Just get back on track as soon as you can and continue moving forward.

• Make it a habit to think before you spend. Ask yourself if you really need the item or just want it. And determine whether you might be able to pay for it with cash rather than credit. This approach can be helpful since unnecessary spending can work against reaching your financial goals.

• Look for ways to reduce monthly expenses. This could be as simple as canceling subscriptions or comparing insurance providers with the goal of lowering your premiums.

Taking a good look at your monthly expenses can be an eye-opening experience. But budgeting could help give you more control and peace of mind. 

Using a credit card to help you budget could be part of your approach to managing money. That could include strategies like setting spending limits on the card, using the automatic payments feature and maximizing your rewards. Consider comparing Capital One cash back cards. And with pre-approval from Capital One, you can find out whether you’re pre-approved before applying. It’s quick and it won’t hurt your credit score.