Josh Elledge - Chief Executive Angel
During the past seven years, SavingsAngel.com has evolved from a simple coupon clipping site to a one encompassing all aspects of personal financial and abundant living. And since the launch ofmy online podcastearlier this year which covers all areas of money saving, I've received lots of questions about budgeting.
So many of you spend hours creating what seems to be the perfect budget and then two weeks into the month: wham! Something pops up that throws off all your numbers. You get frustrated and want to give up. I don't blame you!
The problem is many people budget only for those predictable monthly bills and then plan to take the unexpected or irregular bills out of savings. But that's not how it should work. Your savings should not be raided for items you know will crop up at some point.
Help get your budget in shape by planning for these expenses.
Insurance
If you pay your auto insurance monthly or if your homeowners insurance comes out of your mortgage escrow, you're probably already budgeting for these. If not, you need to get be setting aside money every month. There's absolutely no reason to be surprised by a quarterly insurance bill that arrives like clockwork every three months.
Memberships, subscriptions and camps
You also need to be saving up for all those one-time fees you pay throughout the year. Do some brainstorming and add up everything you pay annually from golf packages to magazine subscriptions to sports camps for the kids. Round up, divide by 12 and put that much aside each month to pay for these expenses.
Pet expenses
Fido and Fifi can be expensive. Not only can food and flea protection add up, don't forget about annual vet visits and licensing. In some areas, you can spend up to $50 just by walking into the veterinarian's door. If your pet should become ill or injured, be prepared for sticker shock. All I can say is budget for your pets my friends!
Taxes
The taxman cometh, and you'd better be ready to pay. Property taxes on homes may be charged twice a year, and business owners should be making quarterly income tax payments to state and federal governments. That goes even for small hobby businesses. It can sometimes be a surprise for those signed up for a direct sales company to get a 1099 form at the end of the year. You'll be even more shocked to learn those “free incentives” the company gave you are taxable too.
Gifts
Christmas seems to be on most everyone's radar screens, even though most don't start saving for it until Thanksgiving. However, December isn't the only time you spend money on gifts. You have birthdays, anniversaries, weddings, open houses and more to buy for. Add everything up, roll in your expected Christmas spending, and save that entire amount up over the course of a year.
Eating out
Yes, I know. That McDonald's drive thru run yesterday was the last time you're eating out this month. You're sure of it, right? Well, I'm sure you'll be tempted to eat out again and by failing to plan for it, you're going to blow your budget. Don't lump eating out with groceries either. It needs to have its own category.
Clothes
If you're not a clothes horse, you might not spend a lot on what you wear but you still need to budget for it. Even the person with the most minimalist wardrobe will need new underwear eventually ““ and I'm guessing they won't want to get those from the thrift store.
House and car maintenance
You may have a brand new car, but it's still going to need its oil changed and tires rotated on a regular basis. Your house will need new furnace filters, and the lawn should probably be mowed at least a couple times a month. Budget for regular maintenance and then pad the account so you're ready for the day when the roof starts leaking or the brakes begin to go.
Vehicle registration
Every year, the state might send you a special birthday reminder with a request you pay up for new license plate tabs. Depending on your vehicle, the cost could range from the price of a family dinner in your favorite restaurant to several hundred dollars. Either way, plan for it in your budget.
Your guilty pleasure
Finally, you get to fill in the blank for this last one. What it is you love to buy but know you shouldn't? It could be a morning latte or the latest movie releases. Maybe it's golf on Sunday or chocolate and wine on Friday night. Whatever it is, you probably don't budget for it because you do feel guilty. It's something you like, but you don't feel you should spend money on it. I say: let go of the guilt (if you can afford it) but only if you put it in the budget.
