Budgeting 101: Budget Categories

A budget is just a plan for your money—and categories are how you tell every dollar where to go.

Instead of “I’ll just try to spend less,” categories let you say:

“This much for bills, this much for food, this much for fun, this much for future me.”

Why KOHO Essential Works Well

KOHO Essential is designed to work like a no fee monthly account for most people because:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• Enjoy unlimited transactions (never worry about sending money to someone again).

• Add Credit Building to help build your credit history without relying only on a traditional credit card

The Big 3 Budget Buckets

A simple way to start is to group everything into three main buckets:

1. Needs – Must-pay bills to keep life running

2. Wants – Nice-to-haves that make life enjoyable

3. Savings & Debt – Money for future you + paying down what you owe

From there, you break each down into specific categories.

Common Budget Categories (With Examples)

1. Needs (Essentials)

These are the “keep the lights on” items:

• Housing: Rent, condo fees

• Utilities: Hydro, gas, water, internet, phone

• Groceries: Food and basic household supplies

• Transportation: Transit passes, gas, parking, basic car maintenance

• Insurance: Tenant, auto, health/dental (if you pay privately)

• Minimum debt payments: Credit cards, loans, lines of credit

If you lose income, these are the things you still need to cover first.

2. Wants (Lifestyle)

These make life better, but you could cut them if you had to:

• Eating out & coffee

• Streaming & subscriptions (Netflix, Spotify, apps)

• Shopping: Clothes, tech, home décor

• Entertainment: Movies, events, hobbies

• Travel & weekend trips

This is where people usually find the easiest room to cut back.

3. Savings & Debt Goals

This is money for future you and for getting out of debt faster:

• Emergency fund

• Short-term goals: Travel, new phone, moving costs

• Long-term goals: House down payment, retirement

• Extra debt payments: Anything above minimums on credit cards, loans, or lines of credit

Even small amounts here matter—consistency beats perfection.

How to Build Your Own Category List

1. Look back at 1–3 months of transactions
   Group them into rough piles: housing, groceries, transit, fun, etc.

2. Create 8–15 realistic categories
   Enough to be clear, but not so many you lose track.

3. Assign a monthly amount to each
   Make sure your total doesn’t exceed your take-home pay.

4. Track for a month
   Compare what you planned to what you actually spent. Adjust.

5. Refine over time
   The goal isn’t a perfect month—it’s getting a little more accurate and intentional each month.