💡 Step-by-Step: Budgeting for Necessities

1. Know What “Necessities” Are

Necessities are your must-haves—things you can’t live without or function properly without. These typically include:

Housing: Rent or mortgage Utilities: Electricity, water, gas, internet, phone Food: Groceries (not takeout) Transportation: Gas, bus/train fare, car maintenance Insurance: Health, car, renter’s/home Basic healthcare: Prescriptions, co-pays Childcare or school-related expenses (if applicable)

2. Use the 50/30/20 Rule (as a starting point)

50% of income → Needs (necessities) 30% → Wants 20% → Savings and debt repayment

Let’s say your monthly income is $3,000

→ 50% = $1,500 for necessities

3. Make a Necessities List With Actual Numbers

Category

Monthly Amount

Notes

Rent/Mortgage

$1,000

Try to keep this < 30% of income

Utilities

$150

Gas, electric, internet, phone

Groceries

$300

Shop with a list & meal plan

Transportation

$100

Fuel or public transit

Insurance

$120

Health & car

Medical/Health

$50

Prescriptions, co-pays

✅ Total: $1,720 (You may need to adjust categories if over 50%)

4. Track & Adjust

Use budgeting tools like Mint, YNAB, or even a spreadsheet Track every dollar for 30 days to spot overspending Cut back where possible (e.g., negotiate bills, switch providers)

5. Tips to Stay on Budget

Meal plan to avoid food waste and takeout Bundle services (like internet + phone) Use auto-pay to avoid late fees Set limits on utility usage (like energy-saving habits)

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