Your car breaks down. Your child needs a costume for the school concert. The geyser bursts. It’s time to stop unexpected expenses from ruining your budget.
One of the big reasons people feel that budgeting is not worth the time and effort, is unexpected expenses. For many of us it feels that as soon as you have a budget, something breaks or someone sends a Please Call Me or you have to go to the dentist.
So what’s the use of planning when you can’t plan for the unexpected? The answer is that you can plan for the unexpected – you just have to change your process a little bit. Here are four ways to show those unexpected expenses some love and to make your life easier – and more predictable.
1. Think differently
Life has an interesting way of throwing unexpected things our way all the time. Which, when you think about it, should make them expected. Said differently: life teaches us to expect the unexpected, which means you need to start thinking about unforeseen expenses in the same way.
2. Record all your expenses
As part of your budgeting process, make sure that you note all your outgoings every single month. This is vital to the success of any budget. Even the R10 for parking or the R20 for a packet of chips must be written down or captured in your spreadsheet. Small expenses add up to make big deficits in budgets, which makes it impossible to cover expenses that really are unexpected.
3. Spot the patterns
If you feel that you have more unplanned expenses or emergencies than is reasonable (or more than your friends seem to have), make a point of tracking them specifically. Decide what is an unexpected or unplanned expense in your life and go through your expense records of the past few months and see how many there were and what they were for. How many times has your car needed work, or did something in your house or flat needed to be repaired? When does the school send “money notes” and what are the reasons? How much do you spend on social outings that were not in your budget?
In truth, these are not unexpected expenses. They are part of your life and should therefore be part of your budget. For example, if there’s a pattern of additional school expenses at the beginning of every year, you should budget for them.
Remember, however, that you also have power over your life. You don’t have to accept every invitation from your friends, and you can agree with your child that she doesn’t have to go on every school field trip.
By looking at your expense patterns, you might even realise that changing your car will be more cost effective than fixing the old one every month. Or that you need a plumber to check your taps and pipes in one go, instead of you paying call-out fees every few weeks. And if you can’t afford to take such big steps right away, this understanding of your situation gives you a financial goal.
Unless you track and analyse your expenses, you may never see these patterns and carry on leaking your hard-earned cash unnecessarily.
4. Build up an emergency fund
Yes, the fourth measure is the one we all know about. Some expenses really are emergencies or totally unexpected, and for those you plan by building up an emergency fund.
One of the biggest favours you can do yourself and your financial wellness, is to stop being a victim to unexpected expenses. Instead, embrace them as a reality and plan for them.Go back