Don't forget to allow for incidentals in your budget
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 for 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 per month! 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 you may forget to include in your budget:
- Petrol to get back and forth to work; to run errands etc
- Additional food items that go beyond your grocery budget
- Personal care items
- Pet food and additional costs
- School expenses for children
- Home maintenance and regular service on cars
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 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. And then reconcile this list with the items on your bank statement to make sure you haven't forgotten anything.
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 in your budget as expenses along with the rest of your bills.
What about larger expenses like home repairs?
This is where having an emergency fund is essential. Which is a good reminder to allocate in your budget the amount you are putting away 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 to start doing so. When something unexpected does happen, you’ll be much better prepared if you have money put aside in your savings account - so 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.