Whether you’re a financial expert who’s been in the game for years or just the average Joe looking to start a budget, the truth is that all of us have a hard time remembering where exactly our money goes. It’s easy to include the necessities, like rent and food, but infrequent and irregular purchases are much harder to predict and easy to forget.
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To help you cover all your financial bases (including the ones that are easy to overlook), here are five expenses you probably forgot to include in your budget and how much you should budget for each.
Also see how “cash stuffing” and other budget tricks are making a comeback due to inflation.
Home Maintenance
Whether it’s termites, a broken washing machine, a leaking dishwasher or a cracked window, urgent home repairs tend to pop up whether your budget’s ready for them or not.
“Emergency and unexpected repairs like plumbing or electrical issues can be costly and stressful,” said Aaron Razon, personal finance expert at Coupon Snake. “It’s a good idea to set aside at least 1% to 3% of your home’s value yearly for maintenance and repairs.”
So if your home’s value is $500,000, set aside at least $5,000 in the budget in case things go sideways.
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Guilty Pleasure Spends
Whether your financial “weakness” is a $5 daily coffee or a weekly takeout order, owning up to your hard-to-admit guilty pleasure spending — and budgeting for it — is important.
“I love a gourmet grocery store/specialty food and wine store,” said Christine Mueller Coley, CFP and senior vice president at SteelPeak Wealth. “I rarely walk by one without going in, and I’ll spend $100 on some cheese, crackers and wine that I didn’t plan for and didn’t need.”
Whether it’s clothes, hobbies, collectibles or snacks, little indulgences regularly eat away at your savings if you don’t plan for them. Account for your splurge and set a budgeting limit, so you can enjoy it without throwing your budget off track.
Car Maintenance
Regular preventive maintenance (and even at-home DIY fixes) can help cut down on car costs, but even at-home vehicle maintenance comes with a price tag. Whether you head to the shop or opt to do it in your driveway, car care needs to be in your budget.
“It’s easy to remember to budget for fuel and insurance; however, the cost of routine maintenance often gets forgotten,” Razon said. “To ensure you are prepared for this expense, budget about $500 to $1,000 per year for car maintenance to cover routine oil changes, tire rotation, brake pad replacements and other essential services.”
Gifts
From weddings and baby showers to birthday parties and anniversaries, gifts are one of the most overlooked budget categories. But they add up fast. Even if you spend only $50 a month on gifts, that’s $600 a year. And December alone often requires a much bigger budget, thanks to big gifting holidays.
Sure, while you could show up empty-handed, you’ll probably feel a pang of guilt. Budgeting for gifts relieves last-minute stress and allows you to spend guilt-free.
Medical Deductibles and Copays
It’s easy to remember to budget for health insurance, but deductibles and copays? Not so much.
“For singles, these can range from about $1,800 for employer plans to $5,000 on ACA marketplace plans,” said Gordon Stein, author of “Cashflow Cookbook.” “For families, they can range from about $3,000 to $10,000.”
By shopping around before landing on an insurance provider, checking and questioning bills, and finding a low-cost prescription provider, you can lower these costs.
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Sources
- Aaron Razon, Coupon Snake
- Christine Mueller Coley, SteelPeak Wealth
- Gordon Stein, “Cashflow Cookbook”
This article originally appeared on GOBankingRates.com: 5 Expenses You Probably Forgot To Include in Your Budget
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
