Now that you’re fresh off the 7-Day Challenge, you’ve got a better handle on your spending. Last time we talked about creating an accurate spending plan, one that incorporates a realistic accounting of your income as well as costs. Fixed and routine expenses (like rent or mortgage payment) are easy to manage, but I find that my clients have a much harder time remembering and dealing with those expenses that vary or are sporadic. Spending plan surprises can derail your efforts toward living a financially organized life.
So, what’s a variable expense that could blow your monthly budget? A dinner party where you spend more on your food bill than you normally would. Special occasions like birthdays and weddings where you need to purchase a gift. Or, an unexpected car repair can take a bite out of your cashflow.
The best way to tackle variable expenses is by trying to tame the beast. You won’t be able to eliminate them, but you can get better at estimating them. Car repairs and birthday gifts are part of normal life. Quicken or QuickBooks can provide a fast and accurate report of what money has gone out of your accounts for what. If you haven’t setup your accounts in a money management software program, go old school and look back on last year’s bank statements. Add up what you actually spent last year on things like gifts and car repairs. Don’t forget those visits to Starbucks, fast food restaurants or other places where you spend cash. It all adds up. The point here is that you don’t have to forgo a treat now and then, but you need to know where your money is going so you can create a spending plan that supports your financial goals.
One quick note about holiday gifts. Do you want to keep your gift giving limit to a manageable amount? Real Simple Magazine has an easy gift budget worksheet. Not only will it help you stick to a number you can live with, it’s a great guide to take with you when trolling the mall in search of bargains.
What’s the weirdest out-of-the-blue expense you’ve experienced?