1. Necessary expenses. I am talking electricity bills, food, school fees (if you are studying or have children), housing, healthcare, and transportation. I believe this group is where most of our money goes because we basically can't survive without these things.
Necessary spending is just be like a compulsory bill that one must consider to pay, for the fact that this are the things that one must get to make life simple and easy for him or her. However, I feel like everything we are spending on are necessary things in our daily life so I think the first option is really compulsory for us.
2. Emergency fund. In cases of emergency, we should be able to get some money for it. Especially in countries where healthcare is not free, we should be prepared to pay if ever we get into accidents or we get sick though hopefully it never happens but still we have to be always prepared either way.
3. Savings. Some people save up for specific things like buying a better house, a better car, getting your kid into a better school among other things. Some people may just save for the sake of having money to pull for emergencies. I think emergency money and money I want to use into building a new home should be separate.
Although I don’t know if I’m the only one who do normally do this, I normally find it hard to separate emergency funds and savings, This two things I feel like it the same thing because when I get emergency I normally go to my saving, so I don’t have any emergency funds they are not different from end though.