This contributed post is for informational purposes only. Please consult a business, financial and legal professional before making any decisions. We may earn money or products from the affiliate links in this post.
Maybe you are sick of running out of money every month, or perhaps you have some savings goals you’d like to achieve—either way, you’ve decided it’s time to create a budget for your household. Congratulations! A budget can help you feel more in control of your finances and can aid you in planning for the future, whether to pay off debt or do a big renovation.
You can create your budget with pencil and paper, or get a little fancier with an Excel spreadsheet. If you want to get really tech-savvy, there are apps you can download to budget on the go, such as Mint or Every Dollar. Don Gayhardt, chief executive officer of CURO Financial Technologies Corp., encourages the use of app features such as tagging and splitting transactions, as they can really help you clarify your spending. Seeing trends right in front of you on an app can be a great wakeup call.
Whichever method you are going to use to create your budget, you already know the basic categories you should include: utilities, housing, food, entertainment, car payment, clothing, and so forth. But what about those things you might forget or simply not plan for? Let’s look at a few items you’ll want to work into your budget.
1. Christmas and Other Gift-giving Events
These holidays and events come around every year, and yet somehow most people end up struggling to pay for them—or worse, put everything on a credit card and deal with it later. Christmas is the obvious big event, with gifts needed for your kids, parents, spouse, siblings, friends, the mailman, teachers, bus drivers, the UPS guy, your judo instructor, your favorite nail technician—the list is endless. Less obvious events might include Valentine’s Day or, ahem, your anniversary. Plan ahead by making “Gifts” a line item in your budget. Figure out how much you spend annually on such big events, and then divide it by twelve. Every month, ship that much off to savings, where you can’t touch it. Boom. When Hanukkah comes, you will be ready.
2. Car Registration and Insurance
That pesky registration needs to be renewed every year (sometimes every two years, depending on where you live), and every six or 12 months your insurance company comes calling for your premium. You can set up a monthly payment for insurance, but often that comes with a processing fee tacked on. Do yourself a favor and create your own balanced budgeting plan by setting aside money every month and paying the premium in full when your plan renews. Likewise, put money in a “Car Fund” for your car registration and other car-related items you might forget, such as oil changes, tune-ups, and rebuilding your transmission.
I’m not talking about your everyday savings account here. Maybe you want to get involved in the stock market, or perhaps you are interested in investing in real estate. Peer-to-peer lending might be another appealing option for you, as you can often start with a fairly small amount. No matter what you are thinking of investing in, you need to have the capital to do so. Rather than taking a chunk out of your emergency fund, figure out what you want to invest, whether it’s $1,000 or $100,000, and start setting some money aside monthly. Make your investment, then start saving for the next one!
With these items in your budget, you’ll be able to cover your day-to-day expenses, as well as the larger ones that pop up quite randomly or just once or twice a year. And next time you find yourself facing an unexpected cost, whether by choice or by necessity, you’ll know what to do—add it to the budget!