Are These Things in Your Budget?

Are These Things in Your Household Budget?

It’s easy to overlook expenses that don’t come up every month. Plan now to be prepared for them later.

You’ve got a household budget and you stick to it — that’s great! But have you accounted for all of your life expenses, or just the ones that come up every month?

Budgets are essential tools for anyone who wants to manage their money responsibly. A household budget is a strategic plan that determines how you’ll spend the money that comes in to your hands on a regular basis. But budgets have some weaknesses. Since most people build their budgets on a weekly or monthly basis, they often forget to plan for some expenses that come around less frequently. And if you encounter an expense you haven’t planned for, you may have a hard time finding the money to cover it.

Since most people build their budgets on a weekly or monthly basis, they often forget to plan for some expenses that come around less frequently.

The answer to this is to identify these irregular expenses when you do your budgeting. Figure out how much they’ll cost you in a year. Then do some math to spread those expenses across the months or weeks in the year. Then you can deduct that amount from your monthly or weekly budget. Use a “set-aside” savings account to keep that money separate from your regular checking so that you don’t accidentally spend it.

If you know what expenses to look out for, this system will work perfectly.

So, what sorts of items do you need to plan for in your set-aside budgeting? Here are five items that are common for many people.

1) Annual Dues or Fees

Many things like our rent, mortgages, utilities and other bills are paid monthly. But there are other things that you may only have to pay once a year. It may be dues that you owe to a homeowners or renters association. You might owe membership dues to AAA or another organization that you belong to. There might be some kind of union or social club dues. You can account for thees fees in your household budget by saving a little bit each month in your set-aside account.

There’s no avoiding taxes, but many people forget to budget for them.

2) Taxes

There’s no avoiding taxes, but many people forget to budget for them. Your main income taxes are most likely deducted from your paycheck by your employer (unless you’re self-employed). But there are other taxes that you may have to pay out of pocket. In most states, for example, you have to pay property tax on any cars you own once a year when you renew your registration. You may have to pay property taxes on your home as well. And if you’re one of those people who ends up owing more on their income taxes than what is withheld during the year, you need to be budgeting for those additional payments too.

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3) Travel

You’ll probably end up traveling somewhere every year.  If you have the resources, you might take a nice week-long vacation with your spouse or kids every year. But even if you’re not taking big trips like that, you’ll probably have to make a trip to visit family or attend a friend’s wedding from time to time. The cost of transportation, meals and lodging can really add up, so make sure you allot some money for travel in your household budget to keep these trips from becoming financial emergencies.

Save a little bit every week or every month so that you have the full amount you need when the Christmas arrives.

4) Christmas

Christmas comes around at the same time every year. This makes it easily to plan for it consistently through the year so you don’t have to go into debt to buy gifts. When you plan your budget, decide how much you want to spend on the holidays. Then save a little bit every week or every month so that you have the full amount you need when the Christmas arrives.

5) Home and Auto Repairs

Unless you live in a brand-new home and drive a brand-new car, you’ll probably have to pay for some repairs throughout the year. Some issues can be so costly that you’ll have to dip into your emergency fund to cover them. But others — like replacing your tires or hiring a plumber to fix a leaky faucet — are relatively inexpensive. You can make an educated guess as to what you’ll spend on small repairs like this throughout the year. Then budget for those expenses using your set-aside strategy.

With some strategic thinking and a good calculator, a set-aside saving strategy will help you budget for these items and keep you from panicking when these expenses come up each year.

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