Dollars and Sense, Part II

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Happy 2016, Readers! It’s that time of year again when I don my financial cap. Chad and I began our journey into finance in the late 90s when Chad attended a course on budgeting and investing. Keeping close attention to our spending and saving has become a hobby of sorts. Earlier, I wrote about dating while on a budget and the modern piggy bank: Virtual envelopes. Recently, I noticed a few flaws in our finances while reviewing the previous year’s expenses.

Chad and I create a monthly budget spreadsheet every year and attempt to record all expenses (still working on that). Then in January, we review our budget and make necessary adjustments for the following year. While fully embracing my “budget nerd,” I noticed a flaw in our system: Large, once per year expenses.

While home and car insurance and property taxes were planned, many expenses throughout the year interfered with the budget: Snow plow services, senior pictures, garbage/recycling services, hay for the farm animals, car tags, etc. These bills ended up being paid at the cost of other things in our budget. Date Night is a big deal to me; losing a few to a budget error motivated me to improve our financial plan. That’s where the previous year’s budget sheets helped. I was able to see many expenses that did not fit in our regular budget, which month the expense was needed, and how much extra was needed for the future.

After some organizing, I formed a plan. Adding a line to our budget for Miscellaneous Expenses took care of many larger expenses (If you try this, be sure to record those miscellaneous expenses for future reference). However, some expenses exceeded that amount. We saved for larger bills by adding just a bit of extra money to the savings account where home and car expenses were paid.

Where will this extra money come from? Personally, I enjoy eating out, not just date night. While little money is spent (usually $5-10), the frequency adds up, so limiting the number of trips per month was a first step. I also admit that I bring home too many animals.  Can anyone recommend a support group?

Can your budget be modified? Morning coffee from Starbucks?  Are you expecting a tax refund? Adding that amount to savings could create extra funds for occasional expenses. On the other hand, if you’re receiving a tax refund, perhaps readjusting withholdings would create enough monthly income for a Miscellaneous Account. The government doesn’t need an interest free loan.

In closing, as Michelangelo said, “I am still learning.” Last year, I noticed we weren’t saving for our next vehicle. After a few adjustments, the Car Account is slowly on the way. I’m really hoping my car holds out for a couple more years! Between adding money to a Miscellaneous Account and setting a bit extra in savings, our finances are another step closer to where they need to be. Keeping a budget helps meet our needs and pursue a few wants.

Happy budgeting and thanks for reading!

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