The hardest part of budgeting for most people, including myself, is unexpected expenses. These may be unexpected expenses BUT you can still plan for them. You really CAN!
If you have a car, plan to have it repaired. The unknowns, when and how much, are the challenges but we have a PLAN! Set money aside ahead of time! I know you are thinking, “Easier said than done!” But stick with it and you can reduce your debt as well as lower your stress level!
- Two ways you can set money aside:
- Set a lump sum of money aside (the easiest way)
- Set up categories for these expenses (create categories like you did for your monthly expenses). This is more time consuming but you can track exactly where your money is going.
- Note – This is separate from your emergency fund! Most financial experts will recommend that you have 3-6 months of income in savings for emergencies.
- These types of expenses are not emergencies! These expenses are unexpected but not an emergency.
- My husband and I agreed to not touch our emergency fund unless he losses his job, a major medical expense, major home repair, etc.
Types of unexpected expenses:
- auto repairs
- home repairs
- veterinarian expenses
- medical bills (co-pays and prescriptions)
How much money should you set aside?
The best way to figure how much to set aside is to sit down and remember all the unplanned expenses you had last year or ones you can predict. For example, I can predict that we will have to take the dog into the veterinarian at least 2 times a year for unexpected visits.
- Make a list of all unexpected expenses
- Estimate how much money you should have set aside for the year
- Take your total and divide by 12 (set this much aside each month)
This might take you a bit to get enough money set aside. Keep working at this!
Once I got this down, budgeting became much easier!!! Now, I just put a set amount of money aside every month and if any unexpected expenses come up, we have the money and it does NOT ruin my budget!
Let’s tackle your budget and make it a word worth talking about!