Creating a budget is an important part of managing your finances. With this tool, it’s easier to account for the various expenses you face on a daily basis.
However, simply having a budget doesn’t guarantee that it will be as helpful as it should. A budget that leaves important items out, for example, could even do more harm than good if you aren’t aware of its blind spots.
It’s not uncommon for a budget to forget to account for a few things, and it’s important to resolve the missing pieces to keep your spending on track. The first step towards fixing budget-blind spots is it to figure out what’s missing, so here are five frequently forgotten budget categories.
Formal Occasions
To start, we have gear for formal occasions. This includes nice clothing, gifts, and money for dining out (with the tip!). Formal occasions, such as weddings, ceremonies, etc. don’t happen very often, so it’s easy to forget that you should prepare for them financially. But don’t fall into that mistake – between getting yourself ready and finding something to offer the host, formal occasions can be costly. Be sure to make room for them in your budget even before you’re invited so that you have enough money to cover everything.
Home Maintenance & Improvement
You should also make room for home maintenance and improvement. Sometimes we have a budget-blind spot for what’s closest to us: lawn care, A/C tune ups, etc. We know that our home needs regular attention, but that fact will take our bank account by surprise if we don’t account for it financially. That’s why it’s important to include your humble abode in your budget. Set aside some cash for the little things like lawn mower gas and the big things like that renovation you always wanted.
Transportation
Make sure you also have a fund for expenses that happen away from home. Costs related to transportation – for parking, tolls, ride shares, and more – often come in small enough amounts that we don’t bother putting them in our budget. However, many small expenses can add up to a lot. Don’t be caught off guard financially by forgetting to include transportation costs to your budget.
Work-Related Expenses
Work related expenses are another important thing to factor in your budget. Whether you work on-site or from home, it’s crucial to have a reliable supply of paper, pens, and the rest; not to mention a comfortable chair and some work clothes. Also consider setting aside some cash for books or online classes that will teach you how to improve your craft. And one more thing to consider – certain work-related expenses are tax deductible. Learning the policies of your company and the tax laws of your area regarding allowable deductions could help you stretch your budget.
Buffer Fund
Lastly, keep your budget flexible by including a buffer fund. This is similar to setting aside money for emergencies, but it’s less specialized. Where the latter would be used for accidents and injuries, a buffer fund is meant to help the other categories of your budget if they’re running low on cash. Say you’re invited to two weddings in on year when you budgeted for one – you can draw from the buffer fund.
Once you’ve added these five categories to your budget, you should decide how much money you’ll dedicate to each. Try not to spend more than that amount unless you have to, but don’t be afraid to set a new goal if the first proves unrealistic. And of course, always be on the lookout for any other budget-blind spots that remain. The more complete your budget is, the better it will serve you.
