Reading Time: 5 minutes Don’t Leave These Essential Things Out of Your Budget
This is a contributed post by Ellie Jo.
Budgeting your money is a crucial part of sorting out your finances. You need a clear budget so that you know how much you spend each month, where you can cut your costs, and how much you can afford to save. However, a budget only really works if you’re able to clearly outline what you spend. A lot of people make the mistake of leaving out important expenses, especially if they only create a monthly budget and forget about other costs that occur less frequently. That’s why creating a budget for six months to a year can be more useful. When you’re creating your budget, don’t forget these essential things.
Cost of Clothes And Shoes
Keeping yourself clothed is essential, but a lot of people forget to consider how much they spend on clothing, shoes, and accessories in a year. Some people don’t shop for these things very often, maybe only buying items when they really need to. Others might make purchases more frequently, especially when buying fast fashion items that don’t last as long. You might have a monthly clothes budget or it might make more sense to consider what you typically spend in a year. Don’t guess, though. Take a look at your past payments to work out how much you usually spend.
Holidays And Other Special Occasions/Events
Holidays and other events should be budgeted for. Otherwise, you can find that when a big event comes along, you end up spending a lot of your savings on covering the costs. This can include holidays such as Christmas or other events like birthdays and weddings. Some things you know will happen every year, while other events will occur less frequently and with less notice. Although these can be a bit tricky to plan for, you can assume that a couple of them will take place. And if they don’t, you’ll have money set aside for something else.
Insurance Costs
To some people, insurance might seem like an unnecessary expense. You could be completely fine and never need it, which might make it feel like you’re wasting your money. But if anything does happen, you’ll be glad that you have it to protect you. There are different types of insurance that you might have, which you should try to budget for. Taking out a whole life insurance policy will help to protect your family if you’re no longer around. Protecting your home and possessions with insurance is essential too. Even pet insurance can help you to protect your finances.
Home Maintenance
Maintaining your home is another cost that could be spread out across the year. If you own your home, you’re responsible for all of the maintenance. However, even if you rent, you will still have to help take care of the property to keep it in good condition. Budgeting for home maintenance can be a little tricky. Some say that you should budget about 1% of the property’s value each year. However, you also need to be prepared for larger repairs and unexpected problems that may arise. An emergency fund can help, but you can also plan for some things that you know will be required eventually.
Guests
Having people visit you is fun (although it can also be stressful) but it’s something that you need to budget for too. Even though your guests may pay their own way somewhat, you’re expected to pay for certain things as the host. You might be providing them with food and transport, and perhaps taking them to see and do things that you choose to treat them to. These visits are easier to plan for if they’re a regular occurrence, but you can budget for slightly more spontaneous guests too.
Pets
It’s great to own pets that give you love, companionship, and lots of fun times. But pets also cost money, and some people forget to budget for their expenses. You might think about regular costs such as food because you include them in your regular groceries. However, you can also have less frequent expenses to consider. How often do you replace your dog’s bed, for example? What vet costs do you usually have to pay? What if your pet has a medical emergency? Or what about costs for doggy daycare or boarding or pet-sitting when you go away?
Parking Costs
You might include various auto expenses in your budget, including fuel, maintenance, and insurance. But one cost that people often forget is the cost of parking. This is an expense that can quickly add up if you commute to work or have any other frequent journeys that require you to pay for parking. Even if each time you pay for parking it doesn’t cost you a lot, smaller amounts can add up. It’s worth considering how much you spend on parking so that you can budget for the expense properly.
Charitable Contributions
Are you someone who likes to give to charity and donate to good causes? It’s not something that you have to give up if you’re trying to be careful with your money, but it is a smart idea to budget for it. Sometimes it can be a regular expense to a favorite nonprofit. However, other donations can be more spontaneous and harder to budget for. It can help to consider donations you have made in the past or to set yourself a reasonable amount that you allow yourself to donate based on what you have left after other expenses.
Organization Dues
If you’re a member of any organizations that charge dues, you should remember to include these in your budget. That might include union dues, your homeowners’ association, or any other civic or professional organization that you might be a member of. These can be monthly costs, which makes them easier to catch when you’re creating a budget. However, sometimes they could be due less often, such as quarterly or annually, which makes them easier to overlook.
Budget your money carefully and you can have a clear idea of how much you really have to spend and how much you can save.
Greg is a Chartered Financial Analyst (CFA) with 22+ years experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66), and is an expert on Investment Products and Financial Planning. Greg has 22+ years experience as a real estate investor and degrees in Psychology and Philosophy.
Greg has been quoted/interviewed in Yahoo Money, Yahoo Finance, USA Today, Authority Magazine, Realtor.com, Business Insider, and others.
Greg is an avid runner, and the father to identical twin girls and their awesome brother. His love of budgeting and his kids led him to join The Great Resignation in 2021.
Disclaimer: Any Financial Tips on ChaChingQueen are general and informational. Speak with a professional about your specific situation.