Most budgeting systems overcomplicate everything with endless line items: gas, snacks, toiletries, toothpaste, streaming, coffee, and so on. But if you’re trying to actually track your spending without losing your mind, the key is to group things into big, behavior-based buckets. You don’t need 20 categories—you need three.

1. Essentials

This includes everything you truly need to survive and keep your household functional: rent or mortgage, utilities, basic groceries, transportation, phone bill. These are non-negotiables. You need a roof, running water, and enough calories to get through the week. Anything that threatens your survival or stability lives here.

2. Obligations

These are things you owe: credit card payments, student loans, insurance premiums, child support, etc. Obligations aren’t always about survival, but they do carry consequences if ignored. Tracking this category helps you stay honest about how much of your income is already spoken for before you even get to spend a dime.

3. Everything Else

This is your flex money. Restaurants, Amazon buys, coffee runs, Target strolls, subscriptions, gaming, gifts, hobbies—it all goes here. You don’t need to separate Netflix from DoorDash. Just track how much you spend total in this category and keep it in check. This is where overspending usually hides.

What This Simplified System Fixes

The biggest problem with traditional budgeting is decision fatigue. You get overwhelmed categorizing every $4 transaction and eventually quit. With just three categories, your budget becomes a behavior tracker instead of a math assignment. You instantly know if your “Everything Else” spending is creeping out of control—and that’s where real change happens.

Common Objection: “But I Like the Details”

Hey, if you love logging every gas station stop and tracking 12 subcategories of food spending, more power to you. But for the average person who’s behind on bills and just trying to stop the bleeding, this method creates clarity without burnout. You can always add detail later—once the habit is solid.

If you want a low-tech way to track these three categories, grab a physical envelope system or notebook. No logins. No apps. Just three dividers and a pen. It works—and it forces mindfulness.

Next Step

For the full behavior-first strategy, check out The No-BS Guide to Tracking Expenses (Without Losing Your Mind). That post shows you how to build this system into your week without spreadsheets, apps, or overwhelm.