Budgeting For Unexpected Expenses

Once you get the hang of tracking expenses, monthly bills are relatively easy to monitor. Unfortunately, all expenses don't fit into neat, monthly categories. Lawn care bills are high in spring and summer months, nonexistent in cold weather. Likewise, you usually get hit with hefty bills for heat in winter only. And your car insurance and life insurance payments are typically paid once a month. Because you don't pay these bills monthly, it can be easy to overlook them when figuring your expenses.

Even if you do remember to plan ahead for expenses like these, they can be easy to underbudget, and this is one of the main reasons why many budgets fail. Take home renovations, for example: They often end up costing more than expected. And vacation: Many people set aside money for the trip itself-airfare,hotel, and meals. Often,though, they forget costly incidentals that are part of every trip: souvenirs,T-shirts,admission fees at museums and parks, and the never ending flow of soft drinks and ice cream cones. Un less you set money aside for these periodic and unanticipated expenses, or have cash reserve funds to draw on you may be forced to put these bills on a credit card.

Finally, there are the unanticipated or unplanned-for expenses which are even harder to budget for. The car breaks-down. Your son/daughter needs another gift for a birthday party. Your brother needs a loan. When figuring your expenses, you can create a separate "slush fund" for such surprise expenses and assign a resonable estimate.