10 Things You Should Budget For….But You Don’t

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04 - Oct - 2013

One of the benefits of meeting day in and day out with people struggling with debt settlement, and bankruptcy issues at Halcomb Singler’s Carmel, Indiana, office is that I go through A LOT of budgets with people.  I tend to know when people are paying too much for cell phone plans and car insurance.  I also see a pattern of the things that people just don’t budget for….but they should.  So, I decided to put together a list of what I perceive to be the top 10 things people don’t budget for even though they should.

Many people who read this list may think I am adding luxuries such as vacations and eating out into a budget when people who are on a “budget” don’t have the money for these items.  In my experience, no matter how strapped for cash a person is they are still spending some amount of money on eating out and a vacation every now and again (even if it is camping….it costs money).  In addition, I think it makes sense for every household to have a budget regardless of income.  Budgets are very important for those who aren’t strapped for cash just to pay their monthly living expenses because they make sure that you are not frittering away your extra money without even thinking about it.

1.  Their Future Selves (Better Known As Retirement).

Not sure how many times I have heard that someone can’t afford to save for retirement.  Your 65 year old self is not happy with you.  Don’t you think your 80 year-old self would prefer not to have cable tv, magazine subscriptions, the latest and greatest cell phone and a brand new car rather than not being able to retire and working as a Walmart greeter at 80?  Even though I personally hope Walmart will be out of business I use this example because Walmart is the worst place I can think of to work.  Wake up people.  You cannot afford NOT to save for retirement.  If you don’t save now have fun living on social security (if there is even social security when you get old), working the rest of your life if your health will allow it, or having to rely on a food pantry or church to get a meal here and there.

2.  Car Repairs

I hate car repairs with a passion.  I deal with them like a 5 year-old throwing a tantrum.  But that’s the thing about cars…they are going to break down at some point.  They are going to need new tires, oil chanes, etc.  And, if you live in Indianapolis and don’t have a lot of patience a new windshield after an ice storm runs about $300.00.  If you put $100.00 aside in an envelope for car repairs when the day comes it won’t be as painful.

3.  Home Maintenance/Upkeep

Just because you can afford the house payment doesn’t mean that you can afford the house.  Houses, like cars, are just waiting to cost you money.  Whether it be a leaking pipe that needs to be repaired, a house that needs to be painted, garage door that needs to be replaced…..it’s going to happen.  And remember all of those appliances in your kitchen and laundry room?  One of those will probably break every other year or so…..just get ready to break out your checkbook.  Your house will bleed you dry.  And so, depending on the value and age of your home and taste in appliances you should probably set aside at least $200.00 per month on home maintenance.

4.  Clothing

Apparently everyone I meet with is wearing the same clothes today that they did in 1992 because they all want to tell me that they don’t spend any money on clothing.  I am not buying this.  Sure, there are months when you don’t spend money on clothing.  But if you save for clothing every month then only spend the amount you have saved when you go shopping it will be a much happier trip than piling all of the kids in the car the day before school and trying to figure out where you are going to come up with the money for new shoes and a few new outfits for each kid.  I recommend taking an inventory of clothing prior to going shopping for clothing just as you might before going to the grocery store.  Then, save up your money and go down to an outlet mall about twice a year to get some new clothing.  Everyone knows their budget in advance plus what they need.

5.  Pet Expenses

If you take a walk around your neighborhood tonight you will see a lot of dogs.  Americans love dogs.  Dogs are not free.  Even if you have a rescue, it still eats.  And if you have a dog or cat I hope you take it to the vet every once in a while.  The last time I took my dog to the vet for yearly shots, heartworm pills, etc, the cost was about $400.00.  If you don’t think about this cost in advance it can be a big hit to the wallet.

6.  Personal Hygiene/Haircuts

This is a category where most women are a bit more in denial than men.  The majority of women get a hair cut and probably a highlight at a salon every 8 weeks or so.  Depending on where you go this can easily run $150.00-$200.00 per visit.  But for some reason people try to tell me that they spend $50.00 per month not only on haircuts, but also on various trips to the drug store for razors, soap, shaving cream, shampoo, etc.  The math there just doesn’t work.  You are (or will be) spending the money.  Add it to your budget.

7.  License Plates/Registration

Oh yes…..that envelope that shows up once a year telling you that you must spend more money on the car that you already pay to drive monthly, keep insured, keep fueled, keep maintained and bought a garage to store it in.  Your car is draining you of some serious money.  However, people love to forget about the fact that the government charges you to drive on the road in addition to all of those other costs.  I remember this one because I wrote a check for about $260.00 to the BMV this morning.  If you budget this cost over the course of the year it is very manageable.  But if you let it sneak up on you there might be an issue trying to figure out how you are going to pay this lively bill at the last minute.

8.  Eating Out/Alcohol/Cigarettes

Prior to filing a Chapter 7 or Chapter 13 bankruptcy for my clients I typically review their bank statements.  Clearly someone who is filing bankruptcy is going through some severe financial issues.  However, even these people are spending some money on eating out.  Not everyone drinks and many don’t smoke cigarettes.  But if they do….it should be in their budget.  You may look back at your bank statements and realize you have been spending far too much on these luxuries.  If you don’t set a limit every month you might be amazed at the amount of money that is going into your mouth each month.

9.  Medical Expenses

Many people are great at budgeting for their medications and any health insurance cost that they need to pay out of pocket.  However, many people forget that from time to time you are just going to get sick and may need to see a doctor.  Additionally, most people forget that if they wear glasses or contacts that there are expenses for not only the glasses/contacts, but also to visit the eye doctor each year to make sure they have the correct prescription.  Finally, women often forget to factor in their yearly trip to the OBGYN.

10.  Vacation

While I certainly believe that taking a vacation is a luxury and that for most families taking a yearly vacation probably should be out of the picture, I also recognize that for family memories and probably mental health reasons that people should take a trip from time to time.  Depending on your budget you may have $300.00 to go camping at a park close to home or $3,000.00 to take a trip for a week to Florida.  Either way, save up for that vacation in advance so that you don’t overspend.  If you put aside $100-300 per month depending on the type of vacation you want you will have it when the time comes.

Adding all of these things to the budget is so important because it helps you to control where your money goes and to realize that your money has to pay for a lot of different things.  If you recognize that you need to account for where you money is going to go when you receive it you are much less likely to get to the end of the month with no idea where your money went and have nothing to show for it.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.