Another budget question - unplanned expenses

[imagine]

Still trying to get a handle on how budgets work.

How do you handle unplanned for or sudden expenses?

Example:

Daughter's glasses. We had planned that she would need new ones next August. But hers broke at school she can't see without them. So the expense became a pay for it today expense. Ten percent discount if you pay then not at pick up ( a week later) How does one handle that?



Maybe I'm having a hard time figuring out how to budget. We have always handled expenses from a paycheck point of view. Two pay checks ( every other week a pay check) with saving ( a set amount each paycheck that goes to savings), taxes, health insurance, charity, social security , retirement (401 K?) already taken out.

One pay check for bills, mortgage, those things that are constant.

Second for living expenses (those thing to actually keep the house and family up and running)

Any leftovers went to savings. Worked for many years but not so much now (increase in doctor visits? maybe)

[Greebo]

Still trying to get a handle on how budgets work.

How do you handle unplanned for or sudden expenses?

We have what we call a "Baby Emergency Fund" (BEF). This is $1,000 saved in a money market account. In an emergency situation (a true emergency, mind you) we tap this fund. Our top financial priority after tapping this fund is to replenish it without getting behind on anything else. Having this cash in reserve helps avoid the use of debt.

Daughter's glasses. We had planned that she would need new ones next August. But hers broke at school she can't see without them. So the expense became a pay for it today expense. Ten percent discount if you pay then not at pick up ( a week later) How does one handle that?

Use the BEF. If you don't have a BEF, you're borrowing money to replace glasses. Since you say you have savings, you pull the money from savigns.

Maybe I'm having a hard time figuring out how to budget. We have always handled expenses from a paycheck point of view. Two pay checks ( every other week a pay check) with saving ( a set amount each paycheck that goes to savings), taxes, health insurance, charity, social security , retirement (401 K?) already taken out.

If you are an employee, you don't worry about taxes, etc. You worry about what you net. Then you plan out, each month, where each dollar is going to go.

One pay check for bills, mortgage, those things that are constant.

Second for living expenses (those thing to actually keep the house and family up and running)

This can work just fine. No reason to change it - but you need to be actively *planning* each month, on paper, and also actively tracking what you spent your money on.

Any leftovers went to savings. Worked for many years but not so much now (increase in doctor visits? maybe)

This statement tells me you aren't planning actively, but passively (we'll do the same thing we did last month) and not tracking expenses. If you tracked your expenses, you would know where your money was going.

Without a definitive spending plan each month, on paper, on purpose, your money will fritter itself away to...well..whatever.

[MomToTwoBoys]

Eyeglasses are in our emergency fund list. We can be reimbursed for $100 per year in a health spending account, but with two kids I'd rather use the emergency fund for that instead. I simply put the glasses on a CC and then transfer the funds when I get home. I never know how much they'll end up being, but it's usually under $100 for each kid.

You could also start a slush fund and budget the amount for your daughter's glasses as a per-year expense.

[mombottoo]

Figure out what past expenses were divide by 12 & put that away each month. Or, if you have an emergency fund you can use funds from that. Since you have a savings account why not take the money for your daughter's glasses out of that account?

My grandchildren wear glasses, my daughter buys the insurance on them...that way if they get broken or lost they get replaced for nothing...just a thought.

[Momto2Boyz]

We have a miscellaneous catergory for each month. This is used for expenses like this. Really, it should be our emergency category, becuase that is what it is used for.

Each month, we set aside $500 of our income coming in that month for miscellaneous. We use that for emergency things that come up that I have not budgeted for. For example, last week my microwave broke and I could repair it and had to go out and get a new one. That came out of this miscellaneous fund. Whatever isn't spent at the end of the month, automatically gets pushed over to the savings category. This is also where I take any extra expenses from too, like if i accidentally go over my groceries, etc. It pretty much ensures us that we have $500 dollars set aside each month for minor emergency expenses and keeps us from dipping into our savings. I should note, that even thought I call it a misc. category, we do not allow ourselves to use the money in non-need situations. We don't put things like eating out, etc. in there!

[MRAHoffman]

"Life Happens Fund" and I would put maybe 1 months salary in it...that's what I'm working on. Take care and God bless.

[imagine]

To everyone:

We were able to pay for the glasses. I wrote a check. Received the 10% discount

We have savings Hubby calls one working saving and one a no touch savings.


Maybe I'm having a hard time figuring out budgeting because I'm married to a man with an accounting degree? Could I possibly be at a handicap because of this?

All money is our money.
I'm only responsible for the shopping of day to day needs of the family. Like food, clothing, kids activities, medicine, house supplies. Hubby handles the rest.

Still having a hard time wrapping my head around budgeting.

I have traced my spending before. Maybe I need to do a more detailed spending tracking for a while? Am I trying to skip steps?

[ladykemma2]

i do mary hunt's freedom account.

you take all expenses that occur infrequently, divide by 12, and put that money aside every month.

[fixer]

I have another way to do this. I have always tracked expenditures every month to see what we spent and where we spent it. Then, I try to reduce each amount as much as I can. I never really had a budget. I just try to spend the least amount possible. I have seen people justify unfrugal purchases by saying the money is in the budget. It just seems they are missing the point. This approach has worked very well for me both in my marriage and in business.

[rachelMcK]

I put a "cushion" in a chequing account we don't use too often. We have a BEF which we use for HUGE stuff, but for little things, like oil changes (DH never tells me approx when he needs one, just when he absolutley needs one). There's about $100 in that account (budgetted, of course) that just waits for something to come up. If nothing comes up, it goes onto debt reduction. For glasses, though, I'd use the BEF.

[imagine]

I have another way to do this. I have always tracked expenditures every month to see what we spent and where we spent it. Then, I try to reduce each amount as much as I can. I never really had a budget. I just try to spend the least amount possible. I have seen people justify unfrugal purchases by saying the money is in the budget. It just seems they are missing the point. This approach has worked very well for me both in my marriage and in business.

Thanks for pointing out that there are many ways to handle money.

Just because "everyone" else is budget making does mean I have to.

I have gotten several different ideas (one of the reasons I love FV)

I'll have to do something serious thinking about what will work best for us.

Thanks everyone (if you have more ideas feel free to post them they will help me think on my deep thinking of this subject)

[knitnmom]

To everyone:

We were able to pay for the glasses. I wrote a check. Received the 10% discount

We have savings Hubby calls one working saving and one a no touch savings.

How funny- we have the same thing! One "no-touchy" savings and one "short-term" savings. We use the short term for any medical expenses or anything that might come up when when we need cash to pay for something.

[imagine]

How funny- we have the same thing! One "no-touchy" savings and one "short-term" savings. We use the short term for any medical expenses or anything that might come up when when we need cash to pay for something.

That is funny. We both have not touch ( no touchy ) savings and we call them that.