9 Living Expenses You Should Have in Your Budget

The four walls of budgeting are the basic expenses that you need for your family's survival: food, utilities, shelter, and transportation. This concept was created by Dave Ramsey, a financial expert and radio show personality, who believes these are the expenses you should prioritize in your budget.

The Four Walls of Budgeting

Food

If you have trouble paying all your bills, food is the first item you should budget for, since you need it to survive. The four walls are for essential expenses, so this should only include groceries and not food that you eat out at restaurants or get delivered.

Even food cooked at home can get expensive, with the average household spending $6,053 on groceries in 2023, according to the U.S. Bureau of Labor Statistics. To save on your essential food costs, try using coupons and shopping at cheaper grocery stores.

Utilities

Services like water, electricity, gas and internet keep your house in working order, in addition to keeping you comfortable and healthy. You should pay your utilities before your rent or mortgage since those services risk being shut off before your landlord or lender can evict you or foreclose on your home for non-payment.

To save on these costs, you can do things like take shorter showers, lower the temperature setting on your water heater, turn down the thermostat during the winter months, and turn off lights and appliances that are not currently in use.

Shelter

This will include your housing costs, such as your rent or mortgage payment, property taxes, and home insurance. Housing costs are typically the largest expense on a budget. On average, housing costs accounted for around 33% of all household expenses in 2023.

Even though housing is the larger expense, you should budget for food before housing since your body can only survive without food or water for about a week. You can save on housing costs by moving to a cheaper area or getting a roommate, for example.

Transportation

The last wall is transportation, and this should include any necessary expenses, such as gas, car maintenance or public transportation, required to get you to and from work. If you can't afford transportation, you might not be able to make enough money to afford food, utilities and shelter. To save on transportation costs, consider biking to work or signing up for a gas rewards credit card that can give you cash back on gas purchases.

The four walls of budgeting represent just some of your monthly expenses. To learn more about other expenses to budget for, check out WalletHub's guide on budgeting categories. On that note, it's worth pointing out that the four “walls” of budgeting are not the same thing as the four “pillars” of budgeting. There isn't a consensus on what those pillars are, but people generally include some variation of spending, saving, income and debt.

You should spend no more than 80% of your income on your expenses, with 50% going to your needs (like housing, food, and utilities) and 30% going to discretionary spending. If you allocate the remaining 20% to savings, you'll be following the popular 50/30/20 rule. Even if you use different budget percentages or categories, keeping your expenses below 80% of your income can allow you to save for the future and help prevent you from...

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