It happens all the time. You are a couple months into your new budget, and then all of sudden you've blown it. You're sitting there wondering where your money went, and how you didn't see this coming.
You need to set yourself up for success from the start, and that means making sure you are including these items in your budget!
Budgeting is all about planning. It's vital that you plan ahead and include gift giving in your budget. You need to be aware of upcoming birthdays, holidays and special occasions. They happen like clockwork, and you need to have money set aside to cover the costs. No, I don't mean pulling the money out of savings!
How much did you spend on Christmas gifts last year? Are there birthdays that you spend money on time and time again? To determine the amount you need to set aside monthly, you need to investigate your spending habits from the previous year.
To figure out reoccurring birthdays, get a good idea of how much you spent on holiday gifts last year, and total the amount. Then, divide the total paid by 12 to get a monthly budget amount.
If you have children, this is an essential item that needs to be included in your budget. They wear an outfit once, and then they outgrow it by the next week. Seasons also change, and they will need new clothes for school. That doesn't mean you can forget about yourself. You need to account for necessities like undergarments and socks in your budget.
When it comes to purchasing clothes in bulk (like back-to-school clothes) look at your total spending by going through old financial statements for the past 12 to 18 months. That will give you a good idea of how much you spend annually, and you can spread the cost over 12 months. You will deposit this amount in your “clothing” cash envelope.
Owning a home can be costly. Things break and need to be replaced. The lawn needs upkeep and flowers need to be replanted. Are you budgeting monthly for these expenses? Keep in mind, even if you don't own a home, you still need to be putting money aside monthly! I live in an apartment, and I know all too well about needing money for house maintenance (like the new vacuum I bought last week). Here are some common home expenses:
- Insurance (home or renters)
- Furnishings or window treatments (even in an apartment you need to have privacy)
- Maintenance & repair (like my new vacuum)
- Pest Control
- Garden & lawn care
- Trash Service
- There are many different ways to budget for maintaining your home. Some people swear by the 1% rule, which suggests that one percent of the purchase price of your home should be set aside each year for ongoing maintenance.
I am not a fan of this method. Each home is unique, the market when you bought your home makes a difference, and there are many different independent variables. The best way to budget for home maintenance is by taking inventory of the things that might need to be replaced and dividing their value by 12. That's the amount you need to save each year. How much did you spend on lawn care last year? You need to set money aside monthly to cover those expense. Consider CIT Bank's Savings Builder account for your maintenance fund.
My rule of thumb. Save enough money to make you feel secure.
If you know your roof is old and needs to be replaced in a couple of years, get an estimate and start saving money monthly. Worried about an appliance breaking? Set enough money aside that allows you to sleep better at night.
Budgeting for your monthly premiums isn't enough. There are always items that aren't covered by insurance. Copays and deductibles can add up and it can put a strain on your budget if you aren't prepared. Make sure you are adding regular dental and doctor visits to your calendar and plan accordingly.
MEMBERSHIPS AND SUBSCRIPTIONS
If you are a member of Amazon Prime or Costco, you have a yearly membership fee you need to plan for. Save monthly for these expenses by taking the annual membership fees, and dividing by 12. Don't forget to include things like magazine subscriptions (hello, Magnolia Journal), gym memberships, or box services (food services or health and beauty subscriptions).
Just because you are creating a budget doesn't mean you can't have fun while doing it. If you completely deprive yourself while trying to spend less and save more, you will fail. The truth is, you can still do the things that you enjoy like going to the movies, enjoying a date night, or traveling – you just have to plan for it.
This is where you get to decide what's important to you. Consider setting some money aside each month so you can do the things that matter, without going into debt or busting your budget.
Pets are part of the family, at least in my home they are. We are in love with our guinea pig, Penny, but she is expensive. She's only the size of my hand, but she eats like she's the size of a dump truck. Make sure you have food, toys, and grooming included in your month pet costs. It's easier to keep track of your pet expenses if it has its own category. This also makes it easier to see if you can afford to add a new furry friend to your family.
HAIRCUTS & BEAUTY
If you are like me, quality is always more important than price in this category. I am willing to spend a little more for my hair appointments, as long as I know it gets done the way I want it to and the products they use are high quality. I get my hair done about every 6 months, which is fewer than most. I do have highlights, but one way I save money is by keeping my highlights close to my regular hair color. This allows me to go longer in between hair appointments without worrying about grow out.
How often do you get these services done? I spend about $100 every time I go to the salon, which is about $200 every year. I take that amount and divide by 12. Sometimes, I am not sure when I need to go in, so I will budget my money a couple of months prior. For example, I usually know I need to go to the salon a couple of months ahead, so I will set aside $50 every month for two months to cover my hair appointment.
Don't forget to include things like nail polish, massages, or special beauty products.