Have you ever created a plan for your finances and got to the end of the month just to realize you didn’t stick to it? Maybe you overspent in one area. Maybe you added to your credit card debt because you had something unexpected come up that wasn’t planned for. Maybe you had to buy new boots for work, or your spouse was working late again so you got take out so you wouldn’t lose your mind with the kids.
Does this sound familiar? It happens all the time! I know myself along with most others could start their budget at the beginning of the month with plenty of extra money, just to reach the end with nothing to show for it. It happens to us all at times. BUT what if there was a way to planned for the unexpected in a way that wouldn’t mess up your financial plan?
There is a way to create a budget that allows for the unexpected.
If you are new to budgeting, a budget simply shows your income minus your expenses each month. It gives you a picture of where your money is going. I recommend having a budgeting app that allows you to enter in all your income and expenses and track your spending. This way there is no guessing. If you want to know which app I recommend, send me a message and I’ll give you the info!
First you start with your total income for the month.
Next you list your expenses starting with:
Savings
Giving
Housing - Mortgage/Rent
Utilities - water, electricity, gas, internet
Transportation - gas, maintenance
Food - Groceries, restaurants, dog food?
Personal - clothing, coffee out, fun money
Health - Dr’s bills, Medicines/Vitamins
Insurances - Life, auto, any other insurances
Debts - credit car, car payments, student loans, etc.
Miscellaneous - Extra buffer for things that you might not account for.
This is the basics to building a budget. But what can get forgotten is what we call “sinking funds”. Those would be things that you don’t pay for every month, but come up, like birthday gifts, Christmas, car registration, etc. You want to put money towards those items each month so they don’t surprise you when they are due, and you already have the money for them put aside.
Another major problem that can arise is that your budget is so tight that there is no money for anything extra. Having a buffer worked into your budget allows for life to happen. In my budget, my buffer is named “miscellaneous”. It can go towards anything that didn’t fit into my budget items listed above. Maybe your buffer is $200 per month so that if you spend over in an area you are okay and don’t have to worry that your money plan is ruined once again. If you end up not spending that $200, then wonderful! You can put that money towards a goal you have! But it gives you space for when the unplanned happens month to month.
Also, if you don’t have an emergency fund, go read my blog post on why you need one and how much you should have!
This little tip of having a buffer built into your budget can help remove some of the stress of your month to month finances and help you stick to your money goals!
Thanks for reading,
Courtney