You cannot budget well until you know what you cannot cut.
Direct answer
Essential expenses are the costs you must pay to live and work: housing, utilities, basic food, transport, health care, insurance and minimum debt payments. Anything beyond the basic version, such as premium plans or dining out, is usually a want.
Typical essentials
- Rent or mortgage
- Electricity, water, heating
- Basic groceries
- Transport to work or school
- Health costs and necessary insurance
- Childcare
- Minimum payments on debts
- Basic phone and internet
Be honest about the level
Food is essential, but takeaways are not. A phone is essential, but a premium plan might not be. Split each category into "basic" and "extra".
Build your list
- Go through three months of statements.
- Mark each item essential, partly essential or non-essential.
- Total the essentials. That is your minimum monthly figure.
Where Teyro fits
Teyro's Needs vs. Wants: Making Better Spending Decisions course turns this into short lessons you can play in a few minutes a day. It has 50 lessons, and you can start free.
The bottom line
Know your minimum, then decide how to use everything above it.
This is general education, not personal financial advice.
