Following a Budget is absolutely critical to keeping your finances in check. But, if you keep going over each month, you need to ask yourself why? Here are several places that people spend throughout the year, but often do not realize it until too late. Make sure these items are in your budget on a monthly basis so you are not caught overlooking them and allocating your money improperly.
It’s easy to remember monthly expenses like utilities, but things like magazine subscriptions or gym memberships that maybe paid on an annual basis should be divided by 12 and written down in your budget. Set aside that much each month to build enough for when they are up for renewal.
Even if you are not a big shopper and don’t buy clothes each month most people will buy some clothes at some point in the year, even if it’s just a wardrobe refresh at the beginning of each season. So give yourself a certain amount each month or put a little aside each month towards your annual purchases.
Property Taxes, Insurance, Quarterly Tax Payments
Again, utilize the same divide by 12 if you pay annually (Property Taxes and some types of Insurance) or by 6 if it is bi-annual (other types of insurances) or by 4 if it is quarterly (Tax Payments for some business owners or retirees), but make sure it is in your monthly budget so you are not left borrowing from Peter to pay Paul and/or Uncle Sam.
A lot of home maintenance costs are unpredictable. The longer you own a home the more likely your HVAC or Vacuum or Washer or Dryer, etc. will break. Set aside an extra amount so you won’t have to borrow money to repair or replace the item. Other home maintenance costs are predictable like cleaning supplies or light bulbs, but make sure an amount is allocated in your budget.
If you know you are going to travel to visit family for holidays or you know you will be taking an annual trip, allocate an amount each month and pay for it throughout the year. It will make your trip or family stay a lot more relaxing if you have it paid for on arrival instead of worrying about it when the credit card bill arrives once you get back.
Believe it or not but birthdays, Christmas and anniversaries will crop up every year, usually on the same date. Go figure. It is easy to budget for them collectively, so add up all your special occasions and divide them by 12. If it is your year to host instead of just getting to show up or if there is the possibility of someone close to you getting married make sure you add in a little extra instead of just factoring in the cost of presents.
I would be remiss if I left this one off, so be sure to include a line in your monthly budget for savings. You will thank me during your retirement years.
You need to treat yourself every now and then to keep your budget from feeling suffocating and to keep your sanity. A “treat” can be something as little as a magazine from the checkout aisle or book from the local used bookstore or a fancy latte from Starbucks, so allot yourself a certain amount of “fun money” each month that you can spend however you please, and you’ll find it easier to stick to your budget in other categories.
Similarly, you should also allow yourself some money for things like eating out or seeing a movie with friends or family. When you budget for these things, you’re able to splurge (within reason) without the guilt.
If you find your budget all out of sorts and you are overwhelmed by debt and are having difficulty paying your credit cards, medical bills or personal loans, not to mention your mortgage and vehicle loans, please call one of our conveniently located offices at Bond & Botes to set up a private consultation with one of our experienced attorneys.
We will analyze your situation and help you make the best decision possible to help you navigate your financial problems.
Grant McNutt is a Managing Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Science from the University of Alabama, and a Juris Doctorate from the Birmingham School of Law. He has been practicing Consumer Bankruptcy Law since 1999. Read his full bio here.