Budgeting for the Unexpected
Question from Kristy P.: I super struggle with the personal category. I have no clue how to “budge” that. I’d love a post just on what that looks like for you guys over a few month period. One month my “personal” category may be super low, the next month it may be WAY high. Do you seriously have every purchase within a year essentially planned out considering you “spend your money before you have it”?
This is such a great question. I remember when we started budgeting and feeling so overwhelmed with every little expense that came along. It was just one more thing we had to make room for on the budget. It's exhausting, sometimes, and frustrating. And there is so much that goes into the "personal" category that it often catches the "unexpected" items that come up.
Side note: 22.1% of our money is spent on "personal" items, such as hair care, toiletries, date night, child care, babysitters, cosmetics, school tuition and supplies, education, tutoring, child support, allowance for children, subscriptions, organization dues, gifts (including Christmas), blow money, weddings, and miscellaneous charges. We don't use all of those line items, and lots of them can be anticipated, but not always.
I can't pinpoint when budgeting for personal items became easier, but I can say that it does get easier with experience. Or maybe we just got better at saying no to ourselves. Like anything, the more time you spend on budgeting the easier it will become. I was shocked at how easy our financial transition was when Kelsey started her new job recently. It sounds like a big budgeting nightmare, but it really wasn't that big of a deal. We've gotten pretty good at anticipating and budgeting for the unexpected.
It's usually just a matter of slowing down and taking the time to think and plan ahead (not always, which I will get to later). The goal isn't to not spend money, but rather to intentionally spend your money on the things you want to spend it on. We've found that when we don't take the time to plan ahead we usually end up with a lot of random expenses that might not have been there if we had budgeted that money on something else.
Example:
We decide to take a short weekend trip and put it on the budget at the beginning of the month. Then we get an itch to buy something that catches our eye. Say, a new water mug at Target. It's a want; not a need. It's easier to say no because the short weekend trip we have planned is more important.
It's not always as cut and dry as that example, but the idea is to tell your money where to go before it spends itself on other (read less important) things that sneak up.
A few more thoughts:
- Budget meetings: We're not super spontaneous people, and we get paid every week. One of us creates the budget each month and looks at the events on our calendar for the coming month and how much is needed for those events. In other words, our budget and our calendar are best friends. It wasn't this way in the beginning, but has improved over time. If you are more spontaneous, allow for that in your budget and think about increasing funds in your entertainment budget.
- Be flexible: A big misconception about budgeting is that you set it and forget it. Sorry, that is not the case. We are constantly tweaking our budget and making sure that we are sticking to our plan. And when things do come up (they inevitably do), we adjust and move forward. Life happens and we try not to take the budget too seriously. We aim to stay focused on our goals, but we give ourselves some grace when things don't go as planned.
- Celebrate the small wins: The unexpected expenses will come up, as I said before. So, on the flip side, when the tides turn in your favor, such as getting a random check in the mail from an incorrect medical bill (cha-ching!) we celebrate that by either adding it to our current goal, enjoying a meal out or putting it toward our newest "dream" fund (right now we're saving up for our March trip to IKEA).
Still, we can't anticiapte everything. In the past year, here's what we've had to budget last-minute as things came up:
- printing photos for our families
- a new book of checks
- helping to host a baby shower
- class reunion fees
- printer ink
- elastic laces for our running shoes
- a handful of charitable opportunities that came up
- a new blender when ours broke
- stamps
These things were important enough for us to say, "OK, we won't be able to save as much this month, but we should do this," or "We need to get printer ink," or "It is important for me to host this baby shower." Things happen! Also, after budgeting for a few years, we can look back and notice that our "rough" months with personal items getting out of hand are June, September and December. We can then better anticipate these things in the coming years.
Sometimes I feel like we don't share enough about these types of budget items. But this is the real life topic that we struggled with when trying to stick to a budget. Budgeting is easy when everything goes smoothly. It's when the unexpected happens that our true character is revealed. I'll be the first to admit that we have not in the past nor currently always made the smartest decisions when it comes to our budget. But, we press on!
How do you deal with the unexpected?