Budget Breaking: Dealing With the Unexpected
I’m pretty good at staying under budget and under control. It’s actually kind of fun to see how much lower than my budget I can come in at when the month is over. But lately I’ve been really bad. It’s not because I’ve lost my frugality or because I’ve gone on a spending binge—it’s because I haven’t mastered the art of being prepared for the unexpected.
The last few months have been really bad with wedding-related stuff that just had to get paid for and I have let myself get caught unawares. Up to now I’ve been dealing with it by simply taking money out of my ING Account and making up the difference. But that’s terrible because it means my savings aren’t growing and I’m not saving up as much as I can for our down payment. My ING account has only one sub-folder for Travel, but the rest is just piled up in one folder called “Savings.” I think I haven’t broken it up further into more folders because I like to look at one big number and say to myself “Wow, good job saving this much.”
But I know I need to change this. The only solution I have so far is to create more of these sub-folders. One for the down payment, one for “unexpected” expenses, one as an “emergency fund.” This way I never touch the down payment and I’m prepared. Maybe I’ll treat this unexpected folder as a micro-emergency fund folder. Not necessarily to deal with emergencies but just things that always pop up over the course of the month that demand to be paid.
Another idea I’m kicking around is getting creative with my accounting. I’ve done this before and it’s basically taking a large charge and breaking it up into different “budget chunks.” I’ll pay for 1/4 of it this week, then another 1/4 the next week, and so on until I pay for it all this month. The problem with this system is that sometimes charges are pretty large and this still won’t get covered by my monthly budget.
Or I can just spend less and charge myself a bill for “the unexpected” to be covered every month by my paycheck. But settling on this amount might be tricky. Scrounging an extra $100 a month “just in case” is fine and dandy—I can always just save it if I don’t spend it. But when a $600 expense comes up, then what? Is that emergency? It is for my budget.
If nothing unexpected happens, I’m awesome at sticking to my budget. But how often does nothing happen over the course of a whole month? A year? So I need to find a way that works. Any ideas/suggestions?