Debt Free Destiny

Are you expecting the unexpected with your budget?

Too often families blow their budgets because of the unexpected expenses that arise during different times and for different reasons. In most cases the “unexpected” expense is better categorized as a “forgotten” or “overlooked” expense that was not properly calculated during the budgeting phase.

Creating a budget means taking a serious look at what your family is spending at all times. This is not simply limited to your utility bills, mortgage, and other monthly payments you are making. Budgeting is about taking the whole of your income and finding out exactly where every penny goes before you can find out how to allocate every penny to where it should be going.

Making the Calculations Work

Calculating spending isn’t as easy as one may think. It is often recommended that people start tracking their spending habits, every single day for a week or perhaps a month. Once you are able to see just how much money you spend each day, you may gain a better understanding of how to cut down costs or how to cut them out completely in order to save more money.

When calculating money, people tend to forget to allow for unexpected emergencies or expenses, such as household repairs. But families also make a different kind of mistake when figuring out a budget. They forget expenses that do not always occur each month or those financial responsibilities that are of a variable amount. Some instances of these expenses are explained below as well as a tip for helping you remember to incorporate the figures into your family budget.

1. Gifts - It almost never fails - the check book is balanced and the mind is celebrating the successful budgeting - but then it hits. You’ve just remembered it is Aunt Mary’s birthday and you have to get her something nice. Not everyone feels this way about gift giving but if you incapable of being a scrooge for any celebration, remember to account for a small percentage of your finds be dedicated to a present/party fund.

Perhaps tucking a few bucks into your desk drawer each week can help you keep some cash on hand for parties you have forgotten or for presents you’d like to buy for others. Just keep in mind, it is the thought that counts. No need to go overboard on gifts not within your budget.

2.Taxes - Many families wait until the last minute to ponder their taxes, unless of course they are expecting a refund. If you know you are going to own tax payments to federal, state, or local agencies, work ahead of time to calculate a rough payment estimate so you can put away money each month and ease the tax burden.

If you are self-employed and must account for your own taxes, put away 20% of your profits each time an invoice is paid into an interest bearing account so that there is no big surprises come tax time.

3.Vacations - Many people have the misconception that because they are on a budget, they can not partake in a family vacation. However, a good budget includes everything and a vacation is no exception. Consider what kind of vacation is within your budget or find one that can be done frugally. Calculate the cost of the entire vacation, including travel, food, and incidentals and start saving money as soon as possible so it has time to build up.

Not only do you get a great incentive for the extra savings work, you also get quality time with the family to celebrate your progress on the financial front.

5. Insurance - Many families do not make monthly insurances payments for their car, house, and life insurance. Some make on-time lump sum payments annually or twice annually. A good goal to set for this type of expense is to set aside enough money each month to enable you to make a lump-sum payment each time, even if your account is set up on a monthly payment plan.

Many insurance companies provide incentives to account holders who pay the balance in full and some will even charge extra fees for the convenience of monthly payments.

6. The Cost of Kids - Parents especially can relate to the sudden, last minute announcement of “Mom, I need _______ by tomorrow for school!” Last minute expenses have a significant disadvantage - they do not let you bargain shop. Running to the store for new shoes, new clothing or other necessary school supplies can quickly mess up a budget. Also, keep in mind, unlike adults, kids grow often and sometimes too fast.

Clothes that fit one day can be too small in no time and families need to plan for the constantly changing sizes and needs of growing kids. This can be an excellent learning tool about finances for kids. Those children who do not want to settle for anything less than name-brand can learn to save their own allowances to make up the difference in prices for basic versus brand-named gear.

Parents can set a certain monthly allowances for kid’s expenses and anything over and beyond can become the responsibility of the child (provided they are of a reasonable and comprehending age).