The other day a friend asked me how I budget for unexpected expenses that don’t count as emergencies. What if you have a wedding to attend or a gift to a coworker to contribute to? How do you account for all those little things that add up every month?
I used to budget down to the last dollar and when things would come up – a going away party, a potluck with friends, a birthday – my budget would burst. It’s like a balloon – if you fill it too tight, it’s bound to explode.
But budgets should be expendable. They should flow with what you have going on. I keep a base budget that accounts for items that are the same every month, like rent, utilities and car insurance. For variable expenses, I use an average number and round up. These include gas, groceries and pet expenses. For entertainment funds, I stick to a budget that’s the average of how much we spend each month.
I try to leave some wiggle room for gifts and other things that pop up. Now when we have a wedding, we don’t have to worry about paying for a hotel room, gas AND a gift. If you space out those purchases, you’ll find that they sting less than if you make them the same month.
Some people like to budget for everything and let it roll over until they do use it. But for me, it’s much less stressful to have wiggle room. That way, if I buy protein powder and spend more on groceries, I’m not worried.
A lot of our financial stress is self-imposed. If we’re maxing out our credit cards, it’s our fault for spending too much. If we’re only paying the minimum on our debt, it’s our fault for not making that a priority. If we’re buying a house that we can’t afford, that’s our fault for reach too high.
Even if you have to cut your spending to better deal with surprise expenses, it’ll be worth it. Now that I budget this way, I’m so much less stressed. I can buy a friend’s wedding gift and not be focused on how much it cost. I can visit family out of town and not think about the extra gas I’ll need to get there. I can get a tire blowout and not worry about how much it’ll cost to get a new one.
Try adding a $20 or $50 cushion to your monthly budget. Stash it away somewhere you can’t spend it. Once the time comes that you’ll need, you’ll be relieved that it’s there.
Yes, ironically unexpected expenses need to be planned for! They are a given and come up every month in some way.