Many people realise what their weekly income is and what bills they have to pay out of that income. However, it’s the day to day expenses and the things that you don’t budget in that cause a big snag in your financial goals. For example, if you’re spending $4.00 per day on coffee while you’re out and about, that’s over $120.00! If you’re not including this amount in your weekly or monthly budget, you could be overspending without even realising it. Let’s take a look at a few more common incidentals that people forget to budget for:
Common expenses that you may forget to include in your budget are:
The list of incidentals that people spend money on could probably go on forever, but regardless, it’s important to remember that you’re never just going to have fixed expenses. Whether it’s a few dollars on food, or repairing something in your home, unplanned expenses can happen anytime .
How do you include all the incidentals?
Write down everything that you spend money on for a month straight. Take a small notebook with you wherever you go and write down what you spent money on and how much it cost. If you live with other people and their funds are included in your budget, make sure they’re doing the same.
Then, once you add up the list of incidental items that you spent money on during the month, you can do one of two things: Add these expenses into your weekly or monthly budget, or decide to save a little bit of money and stop spending on them altogether. Whatever you decide to do is up to you, but by doing this, you can start counting incidentals on your budget as expenses with the rest of your bills.
What about the larger expenses like home repairs?
This is where having an emergency fund is essential. Which is a good reminder to budget in how much money you’re putting in savings every month too! And if you don’t pay yourself first and save at least a small portion of each pay, it’s time start doing so. When something unexpected does happen, you’ll be much better prepared if you have money sitting aside in savings so that you don’t have to take the funds out of your regular budget and risk not being able to pay all of your bills.
In summary, in order for budgets to work effectively, you need to make sure you’re counting every expense – even your morning cup of coffee on the way to work, and you also need to have money in savings to cover the costs that you didn’t expect or those that don’t happen very often.