Are we talking about budgeting nightmares?
Never encounter a major issue forcing you to strip your budget out of the way and work on that emergency , i want more money now! Working with a budget is not a easy walk in the park, organisation is key… Having a regular incoming paycheck,as a consultant, contractor or your own boss is certainly much better but not the case as we know. When you have a regular income, it is easy i would say to keep up with your budget but sometime it is the othey way around.
On my side, i do use a strick budgeting system allowing us to have money at the end of the month and not be stuck in a bad situation. Of course it will happen that certain months your not abble to save as you want but thats part of the game. We should never try to control any outcome in life , it is more a question of how your dealing with issues on a daily basis with what you have.
Let’s see why, budgeting could be your worst nightmare and how to woke up out of this bad dream.
What are the top common problem when dealing with budgeting and don’t worry will lay out at the same time some solutions to help along the way.
Listing your exepenses
It could difficult to list all the informations regarding the differents expenses you may have in a month or in a year. You do try your best to identify as much information as possible but again it change so much, you need to have your budget sheet handy. So the information is accurate on a weekly basis, once you have your paycheck, or a revenue… Update your list right away.
The list consist of reccuring and static payments in a month or in the year period. Try to have 2-3 column to list everything, even if your spending a dollar for a muffin, it need to be in there. You want to have the clearest number in hand so you know where to start. Even money landed to a friend should be in there, all regarding your money is there.
Did we lost track on our expenses… The main document was erase from the computer and of course there was no backup to retrieve any informations.Prior to lose our infamous document, all numbers that we had in the document was to our surprise way off. Electric bill was 20% more than the month before, car repairs came with a bang,pump issue in the house, another interesting spending.
Always have a backup of your budget planning, on your computer, another one on paper and you could even send yourself a copy via email or by text. Trust me, that’s what we did.
Budget = A lot of Work.
If you say budgeting is a lot of work ,you are so right! It require a big commitment for parties involve in spending any money in the household. Don’t lose the invoices, the receipts, don’t forget to pay this bills, the check will bounce if there is not enough money to cover the payment and so much more.
There is a system that i do use call the “Envelop System” consisting on helping you organize your finances in a way to help you have control.
Most of the time when we have a invoices or a receipt, it will endup in the waste basket, lost or eaten by the dog! By having a envelop system,you keep your bills in order, by naming each major items on your envelopes…
- Electric Bill
- Car Note
- Entertainment (Movies,restaurant…)
- Cable (internet, tv and telephone)
- Gas (for your car or your house)
- Repairs (car-house)
- Credit (credit cards, line of credit, store cards…)
- Mortgage ( house or a rent for a appartment)
- and more…
It all depends on your financial situation, some peoples will have a lot of paperwork to deal with and others just have a few. Another solution could be, to have a software to include the information, it is not for everybody.
You need to input all of your numbers within the software, sync the information, making sure your other half have access also. So they could input other informations and it could be a mess. Try to work in a simple way.
Bills issues [Regular vs Irregular]
This is one of the most frustrating one to deal with. You could have a budget but how to deal with all kinds of expenses coming left and right, that we don’t have control. It is just a pain sometime,talking about a electric bill the other day with my wife. It turn out, they increase the bill again and when asking why to mr. Electricity: it is normal sir, it is the time of the year!
The worst to deal with are the property taxes and homeowner insurance, you have to pay them and on time, if not you could be in big trouble.
There is also bills like auto insurance, renters insurance, life insurance and auto registration. All really important, we must have a budget for those particular bills…Use as the red envelop in our house. When the bills arrive in the mail, you don’t have a heart attack, ouf!
The regular bills are a lot easier to plan and to work with, your mortgage, your car note, credit card and so on.
How do you plan to fix the irregular situation? By having a fix amount every month put aside only for those expenses.You need to know the actual numbers spent at the end of the year, for all the expenses related to ( property taxes ,homeowner insurance…). Divide the number by 12 and from there you will know how much you have to save every month.
Try to have a buffer while saving because sometime you could have a surprise and needed to had a extra 5% because you house took some value over the last 2 years. Giving more to the City to keep up with the new value of your house. In a way it is a good thing and on the other part, protect youself to take the punch.
It is part of life, we always have a little something happening, that we want it or not. When thinking about all the things that could happen in a day, it is just crazy.
We should not be thinking about the unexpected and just be here and enjoy our life. Try to plan ahead if possible, even 1000$ is a really good number to have on the side. I never tought ,i would think this number was too small for a emergency but it is the perfect one. But again when looking at my numbers, i do see a issue and needed to adjust it to 5k as a emergency fund.
Most important elements to protect could be:
- Roof Lick
- Engine failure
- Sudden death (hope for insurance)
- lost of employment
- house fire (hope for insurance)
- Travel issue (last minute expense, need to take another flight)
- urgent repairs
- and more…
It add up really fast ,i may agree. Just try your best to protect yourself for adverse events, so you sleep better at night.
There is only so much we are abble to do in a week but taking the time to work on our budget should be a priority. When facing bad days, it will help to know that you did whatever possible to go through it without much harm.
I wish you all the best on this beautiful day.
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