If you’ve been working hard to implement good money management practices, then you’re definitely designing a budget. Getting the basics of a good budget down can be relatively easy: food, rent/mortgage, utilities, insurance, fuel, etc. However, you may be struggling to see the figures actually working. It could be that you’ve forgotten about some budget categories that are major cash-drains!
Most Forgotten Categories
Emergency expenses can be a big drain on your budget. From cars needing repairs to unexpected trips to the doctor, these things can really add up. If you want to get serious about your money management techniques, make sure to allocate a certain amount every month to these categories. Total up your yearly expected emergency expenses (this can be hard to estimate), and then set aside a twelfth of that figure every month.
Technology. Count on it breaking. Unfortunately, that’s just how it goes. With cell phones nearing computers in sophistication, the repair bills can be costly. Factor potential technology repairs (and necessary upgrades) into your yearly budget.
Adjusting Interest Rates. Are you paying credit debt that has an adjustable interest rate? Do you expect that interest rate to increase? Or, if you’re paying student loans, are you prepared for the tax deduction on the interest to disappear? These things can make a big difference over the course of the year.
Take these and other forgotten categories into account as you develop your money management skills! When you’re more aware of where your finances are going, you can get out of credit debt faster, and avoid it in the future. Keep up the good work!