Building a line item budget


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Many people worry that creating a budget will be too complicated, too restrictive, and put the kibosh on fun.


But a budget is really nothing more than a plan for your money. A well-thought-out budget can help you take control of your finances and use your money with intention, so you have enough to cover your bills, build your savings, and (yes) still have enough left over for fun.


A line-item budget, which groups expenses into specific categories can be particularly helpful because it gives you a bird’s eye view of your spending patterns (including areas where you may overspend).


And while it might sound complicated to set up, you can actually put together a personal line item budget in a few relatively simple steps, which include: tallying your income, coming up with spending categories and setting spending targets for each category.


Related: When should you pay in cash?

What is a Line Item Budget?

A line-item budget is a method used by many small businesses to plan and keep tabs on financial spending. But anyone can benefit from setting up this type of budgeting plan. A line-item budget groups related costs together. For an individual, that would include fixed expenses, such as rent and utilities, as well as variable expenses, like groceries, restaurants, and clothing.


Line item expenses can also include saving and investing, such as emergency savings, savings designated for specified large purchases (such as a car or a vacation), and retirement savings.


A line-item budget helps ensure that you’ll have enough money each month to cover essentials and nonessentials (without running up debt), while also putting money aside for future goals.

Line Item Budgeting: Step by Step

To get started with budgeting, it can be a good idea to gather all of your financial paperwork, including bank and credit card statements and bills, for the past six months or so, and then follow these simple steps.

Step 1: Figuring Out Your Household Income

One of the most important pieces of information you’ll need to create a budget is how much money you bring in each month. You’ll want to look at after-tax income since that is the money you have available to spend.


Depending on your situation, you may only need to look at your W2, pay stubs or the direct deposits on your bank statement to assess your monthly take-home income. But, some may have different streams of income, such as:

  • Side hustle cash flow
  • Investment income
  • Alimony
  • Child support
  • Small business income

If you’re self-employed, you can look at how much you bring in over six to 12 months and then come up with a monthly average, making sure you subtract any income taxes that will be owed on this money.

Step 2: Coming Up with Personal Budget Line Items

You can use the financial paperwork you’ve gathered to make a list of all bills that must be paid on a monthly basis–these will all be line items on your monthly budget. If you have bills that come due quarterly, semi-annually or annually, such as insurance, you can break the total amount into monthly payments so you can enter them in each month’s budget.


To figure out how much you spend each month on variable expenses, like groceries and entertainment, you can use credit card and bank statements, as well as any receipts you’ve saved.


To get a more accurate picture of your weekly spending (that includes cash payments like morning coffees and food truck lunches), however, you may want to actually track your spending for a month or so. There are plenty of apps you can use to track and categorize your spending. Or, you can also save receipts and add everything up on your own.


Everyone’s financial situation is different, but what follows is a list of suggested categories to help make sure you don’t forget any monthly expenses:


  • Mortgage or rent
  • Property taxes
  • Household repairs
  • HOA fees


  • Car payment
  • Car warranty
  • Gas
  • Tires
  • Maintenance and oil changes
  • Parking fees
  • Repairs
  • Registration and DMV Fees


  • Groceries
  • Restaurants
  • Pet food


  • Electricity
  • Water
  • Garbage
  • Phones
  • Cable
  • Internet


  • Adult clothing
  • Adult shoes
  • Children’s clothing
  • Children’s shoes


  • Primary care
  • Dental care
  • Specialty care (dermatologists, orthodontics, optometrists, etc.)
  • Urgent care
  • Medications
  • Medical devices


  • Health insurance
  • Homeowner’s or renter’s insurance
  • Home warranty or protection plan
  • Auto insurance
  • Life insurance
  • Disability insurance

Household Items/Supplies

  • Toiletries
  • Laundry detergent
  • Kitchen/Cleaning supplies
  • Tools


  • Gym memberships
  • Haircuts
  • Salon services
  • Cosmetics/Grooming (like makeup or services like manicures)
  • Babysitter


  • Personal loans
  • Student loans
  • Credit cards


  • 401(k)
  • IRAs


  • Children’s college
  • Your college
  • School supplies
  • Books


  • Emergency fund
  • Big purchases like a new mattress or laptop
  • Other savings
  • Gifts/Donations
  • Birthday
  • Anniversary
  • Wedding
  • Christmas
  • Special occasion
  • Charities


  • Alcohol and/or bars
  • Games
  • Movies
  • Concerts
  • Vacations
  • Subscriptions (Netflix, Amazon, Hulu, etc.)

Step 3: Setting Up Your Line Item Budget

Once you have all of your categories (or line items), you can use a computer spreadsheet or a lined notepad to list all monthly expenses. Next to each entry, you can place the amount of money you are budgeting for it out of your monthly income. These numbers can be based on previous bills, as well as information gleaned from tracking your spending.


If you find there isn’t enough money in your monthly income to cover all of your expenses–including retirement and savings–you may then want to rejigger your budget. This might involve cutting back on nonessential expenses. For example, you might decide to cook a few more nights per week and spend less on eating in restaurants or getting take-out. Or you might opt to get rid of cable, or quit the gym and start working out at home. You can then reallocate that money toward saving for a future goal.


One guideline for budgeting you may want to keep in mind is the 50/30/20 budget rule, which states that you should put 50 percent of your income toward needs, 30% toward wants and 20% for savings. How you allocate spending within these categories is up to you.


You may also want to keep in mind that a line item budget isn’t set in stone. As you adjust your goals or experience changes in your income or lifestyle, you can make tweaks and changes to your budget. Your life likely isn’t stagnant, and your budget shouldn’t be either.

The Takeaway

A line-item budget, which groups expenses into categories and subcategories, can shine a light on exactly where your money is going each month and help ensure that your spending is in line with your priorities and goals. In order to create a successful budget, everything should be accounted for, from large expenses like your mortgage and car payment to smaller expenses like your gym membership and Netflix subscription.


When creating a line item budget, you may notice that you’re spending more than you thought on things that aren’t all that important to you, or that you rarely use. You may then decide to reallocate that money towards something you really care about, such as saving up for a new car or a down payment on a home.


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SoFi Money
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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7 fun ways to save money


Whether you’re building your emergency fund or putting a portion of your paycheck away for you and your family, chances are you’re saving money. It’s possible this all-important financial habit can feel tedious and boring, but with a little creativity and determination, saving can be interesting, dynamic and exciting.

Related: 50/30/20 rule demystified




Not sure how to make saving money fun? You could start by identifying your goals. Are you saving up for a big purchase, like a down payment on a house? Are you saving for your child’s future education?

Once you’ve figured out what you want to accomplish, you could determine a target amount of money you’d like to save. While this number might change over the course of your savings journey, you can always readjust your plan.

If you have an idea of how much money you’d like to work toward saving, you can consider diving deeper into your finances to pinpoint realistic objectives.

Once you’ve reviewed your individual financial circumstances and have a better idea of your savings goal(s), you could try these fun ways to save money.


With the right company, even the most mundane tasks can be enjoyable. You could talk about your savings goals with your friends and family members to potentially identify a saving buddy with similar objectives.

An ideal saving buddy will be supportive of your financial goals, flexible about changing plans in order to accommodate your specific savings needs and have a positive money mindset.

Checking in with your buddy regularly could help keep you both on track and you can celebrate each other’s accomplishments. If you’re stressed about how to make saving money fun, you could brainstorm creative tactics with your saving buddy and implement them together.


Saving money does not have to be synonymous with missing out on exciting opportunities around you. You could enjoy free activities offered in your area.

Perhaps your local park offers free theater performances or concerts in the summer, or your area bookstore hosts interesting literary panels and author discussions with no attendance fee. Think about the resources provided by your local library, such as book clubs, language exchange programs, craft nights and movie screenings.


jacoblund / istockphoto


A potential hands-on and fun way to save money is adopting a DIY (do-it-yourself) attitude. You could create things using materials you already own instead of buying new products. When meal-prepping for the week ahead, think about recipes that incorporate ingredients you already have in your pantry.

You could make your own household cleaners out of vinegar, lemon rinds and herbs or face masks and toners using fresh ingredients like avocado, tea, honey and oatmeal. There are ways to reuse materials that might otherwise be thrown out or recycled: Newspapers and coupon booklets could make great wrapping paper, and old cereal boxes might be repurposed into desk organizers.




If you’re looking to break up the monotony of saving, you could consider incorporating games and challenges into your overall savings plan. A friendly competition with your saving buddy could be seeing who can save the most money every week, month and/or year.

Creating small rewards for reaching your goals might be an incentive, too. (Bonus points if these rewards are free!) No-spend weeks, where you refrain from spending any money for seven days, also might help with saving. You could make it fun by taking out a $20 bill from the ATM at the beginning of each month, for example and not spending it.


Getting serious about saving money doesn’t mean you need to give up “luxuries” such as exercising, new clothes and accessories, or home goods. Trading skills and swapping goods are two potential examples of how to make saving money fun while not depriving yourself of the things you want.

You could go to your favorite yoga studio and ask if they have a work-trade program where you can clean or complete administrative duties in exchange for classes. A clothing swap with your friends could refresh your closet at no cost. You might also consider an informal exchange with skilled friends.

For example, if you’ve been eyeing an original painting from your artist pal but don’t have the funds to pay her, you could offer your website design services (or some other helpful skills) for the painting.


Sometimes, cutting down on expenses might not be the most effective way to reach a savings goal. It might be easier, in some cases, to make a bit more money than to reduce costs, especially if you are spending more than 50% of your income on non-discretionary expenses like groceries and debt payments.

A financial advisor can help you determine if increasing your income is an appropriate action based on your individual financial profile.

If so, you could reflect on your particular skills and/or hobbies to see if there is a way to translate one of them into an income stream.

For example, if you love to knit, you could start an online store for your yarn creations. If you have a knack for stringing words together, you could offer your writing or editing services in a freelance capacity. A successful side hustle could help bring additional money into your bank account and add more fun and enjoyment in your life.


Photobuay / istockphoto


Putting away money for your future does not need to be a boring task; there are countless fun ways to save money that could be customized to your specific financial needs and wants.

Starting to save today—even in small amounts—might help prepare you for even more fun in the future.

Learn more:

This article originally appeared on and was syndicated by

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi Money
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA  SIPC  . Neither SoFi nor its affiliates is a bank.




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