You have a budget, and are living within it- you have it made! Or do you?
Some things that many people don’t plan for in their budgets can cause serious financial difficulties, especially if they happen all at once. Being able to plan your budget to fit in
- Car repair or replacement
- Household or family emergencies
- A vacation- even for a weekend
- Taxes on a windfall
- Your personal Bucket List
[Read: Budget ‘Serial Killers’]
I will provide you with even more reason to relax and enjoy living, with fewer worries. Budget tips are everywhere, from big-name celebrities to many blogs. This is because many people forget about these things, or simply don’t want to think they will ever be needed. A small amount of extra savings in the budget will avoid you needing to use and rebuild your emergency fund over and over.
A basic set of budget tips will at least start to cover the home and car end of the spectrum. A very rough figure of 4% of your home’s value is suggested as a yearly savings for emergencies. This figure may well need to be adjusted upwards for the age of your home, and the condition of the appliances and systems. You have a fair idea of how many miles are driven each year: a look at the charts for recommended maintenance will let you figure in an amount to place in a savings account for expenses like brakes or new tires. In addition to your monthly figure for service and tune ups, this money can be set aside in a savings account for the car- or home-related expenses. This is a huge figure, especially for someone with a first job. Careful budgeting will allow you to squeeze this in.
Family is another big area that people do not budget for. A new baby in the family, a invitation to a wedding, or an emergency trip to the hospital can leave a family member without the income or savings to take care of the unexpected. Even a small amount of savings, placed in your budget, to cover these things will let you have the comfort of knowing it is there. You can decide on a case-by-case basis if you want to help with any situation. Even if it isn’t ever needed, the fact it is there is valuable.
[Read: Is Your Budget Destined To Fail]
Some of the best budget tips I ever have heard come from many sources, summed up by “Overestimate expenses. Underestimate income.” This allows a small margin of error for price changes and for additional savings. Using this with a written budget avoids the problem of budgeting in a bonus or not accounting for price changes. A simple rounding to the nearest $25 (up for expenses, and down for income) also allows easier math.
Budget tips for the future
As the modern workforce moves away from the traditional office setting into the telecommuter world, tax codes have not kept up, nor have many of the savings plans. A sudden windfall from a lottery winning or inheritance may also cause you tax problems. A sudden tax bill when you were expecting a return can ruin a budget planned around that return. The budget tips for taxes are to make sure you check with a tax professional, or an accountant, to make sure that you are not going to have an unexpected tax bill at the end of the year. If you make money from hobbies or freelance assignments, a quarterly tax plan may be the best budgeting tool for you.
And since you have worked so hard, planning for and finding budget tips for weekends away seems like a good idea. Budgeting for these outings is so much less expensive than reaching for a credit card with higher interest rates and paying for it. The bank will pay you interest on your savings, versus you paying interest to the banks for the credit you used. I find knowing that I can afford the weekend away, without making more bills, a much more relaxing and creative vacation.
Once you retire, there well may be things that you want to do, or changes in prices that weren’t what you planned on. Having an account to let you do some of the things that you dream of is the best of the future budget tips. You start this while you are young, and as you age a bit, you can use these funds to explore and try things that you want to. Many people forget that having a budget for fun doesn’t stop once they quit working, it becomes more important than ever.
[Read: Why a Budget Really Matters]
Regardless of your age, follow these budget tips, and let your budget work for you in case of emergency. Having these items in your budget is wise, just for the comfort of knowing it is there.