I hit the road on a beautiful drive back from Tennessee this past weekend. As I was enjoying the Spring colors, feeling the warmth of the sun shine through my car windows and, and singing at the top of my lungs to a blaring radio, I suddenly noticed it staring back at me......My engine light had come on and I was 2 hours from home. What? I gripped the steering wheel and prayed my car would make it...
Thankfully I made it home with no problems and I popped right on over to a service mechanic this morning and 4 hours later walked about the door with a car good as new. Without giving too much of the details, I will share that it was a $300 hit to my bank account. All of this occurred in a 24 hour period and not one little sign of stress, anxiety, or doubt entered my mind. Several years ago, if this had happened to me, this peace of mind I was experiencing now, would not have been happening back then. I would have been a complete wreck because a $300 dollar bill out of nowhere was not something I used to plan for. However, because I have learned to improve my budgeting techniques, I have been able to stay in better control of my finances. The added bonus, my stress and anxiety has remarkably improved!
So my point being, I was prepared. Are you?
As you work on your budget and try to figure out how much you should expect to spend each month in all those little categories, remember that their are 2 kinds of expenses in life. Those that you expect to happen, and those you have no idea are coming and smack you right in the face when you least expect it.
These "expected expenses" are a little easier to budget. We know that we have to pay our housing bill. We know we have to keep the lights on. We know food has to go in our stomach. It's the unexpected that we don't want to budget for because we hope and pray they never happen, but I'm here to tell you know, YOU CAN NEVER BE TOO PREPARED.
If you have built yourself a budget I would like you to go back and visit it now and make sure you have the following categories included. It may not be easy to set money aside for these things, but it will give you peace of mind, and the ability to pay the bill when the worst case scenario happens.
Housing Maintenance - Think about all your major appliances and other amenities of your house. Refrigerator, washer, dryer, dishwasher, heating and air, water heater, swimming pool, fire place, etc. Are you prepared in the event one of these things breaks down or all the way dies on you? Even if it is far from its life expectancy being over, you never really know if you'll have a problem. Save a little money each month. It's up to you to decide the amount. The more you own, the more you should save. The older your belongings, the more prepared you should be.
Car Maintenance - Even if your car is brand new and you are fully insured, you never know when that out of the blue nightmare will happen. Someone smashes your window, a flat tire, etc....I'm not that savvy when it comes to the maintenance of a car so I set aside a little more than most people might to keep my peace of mind. The more you own, the more you should save. The older your belongings, the more prepared you should be.
Emergency Fund - As much as I sit down and try to prepare myself for the unexpected I still like to have an extra cushion. I set aside a little money in this category for the truly crazy unexpected things I cant think of with my most creative imagination at work. For instance, 6 months ago someone smashed my car and stole my laptop. I didn't ever see this coming, but thank goodness for my emergency fund!
Here are some other categories where you may not need a completely separate category, but I still encourage an added buffer in the amount you budget each month just to be safe.
- Pets - unexpected illnesses
- Children - unexpected ANYTHING, they are kids :)
- Medical Expenses - accidents and illnesses not covered by insurance
End of Year Reward - At the end of each year, if I have money left over because I didn't need my emergency funds I have an added bonus of money. I then allow myself to either put that money towards goals or wishes I have set for myself. (More on that later)
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