Budgeting can be really overwhelming at first. There’s so much mental and emotional effort that goes into just getting that first draft down on paper.
There are so many items to write down and categorize, so many dollar amounts to recall, statements to dig up and receipts to find. You’re in the weeds from the get go.
For me, after getting started, one the most difficult things about learning how to budget was how it exposed just how much money I was spending without really thinking about it.
I was paying for things like taking friends out to dinner (too often), regular trips to the car wash, mindlessly buying clothes, etc. Up to that point, I wasn't fully aware how much money I was "leaking" because I wasn't tracking anything.... at all...
Budgeting illuminated how much I was spending ridiculous amounts of money on these things like: eating out, going to the movies, entertaining “friends” and on other "junk" that had no long term return on investment.
The first draft was very 'rough' for me. I looked something like the guy below.
Dang, I REALLY need a budget!"
The numbers on the page left me feeling embarrassed, sobered and terrified because, for the first time I could actually see that I was in a really precarious financial position.
I had no savings and high living expenses. I was in real trouble.
And even though there was initial resistance to sitting down and doing that rough draft (for fear of what I would find), I had finally gotten to that point of being so fed up with my debt that I was willing to do just about anything to better my situation.
This all may sound familiar to you because maybe you've reached the same point.
And, even though you may have reached this "tipping point", it's important to understand that the process of learning to budget takes about 90 days before you really start to get good at it.
Perfectionism is your enemy in the first stages for sure. So, let that go if it's part of your mindset.
It does get easier, though. After the first couple of months of getting it all down on paper, you start to feel like you’re getting your arms around the problem. You start to see patterns and you get into a rhythm of predictability and process.
You even start to think to yourself, “wow, I think I can actually do this!”
But wait... Don't get too cozy or confident yet, because there's almost always a "little" surprise that shows up in those first 90 days to remind you you're still a beginner...
Out of nowhere you'll “discover” your first irregular expense that's a result of some jolting memory lapse. Something that you just totally forgot to put in the budget.
Suddenly, your new little slice of budgeting heaven is interrupted by a half-ton pallet of bricks dropping through the roof into the middle of your living room.
This little "budget buster" could be that car insurance bill that you decided to set to every 6 months because it saves you $200 a year (good call, by the way, you just have to remember to plan for it now).
It could be the fact that your daughter grew a whole inch in the past 6 months and needs all new clothes for winter. Whatever it is, it’s inconvenient and destructive to your new-found sliver of financial peace.
But it's important to keep in mind when you’re in this first 90 days, that budgeting is a skill and not a talent.
Think about that. It's true. No one is born with a talent for budgeting. It's ALWAYS the learning and development of a skill.
You’ll hear us repeating that like a broken record around here. And it's important to repeat precisely because it's easy to forget, especially in the beginning stages. Practice, practice, practice makes permanent, permanent, permanent.
Just don't let this little blindsiding cause you to quit. I can promise you that these "surprises" will be come fare more rare if not non-existent in the next few months and years.
But, when it does happen (as it likely will), it may be an opportunity to try and make a list of other irregular expenses as a means of capitalizing on the rush of emotion.
It might just help jog your memory to some others you've potentially left out.
So this list, while not exhaustive, is meant to get your brain warmed up and combing through some possible expenses that you've probably forgotten about.
We want you to not be blindsided when these guys arrive at your doorstep with their hands out saying, “where’s my money?”
If you think of others we've left off, please feel free to leave them in the comments section below to share with the community.
"Oh no!! I totally forgot about this one!"
Bathing suits, coats, sweaters, costumes: These are the things that can creep up on you, especially if you have growing kids.
Even if you don't buy clothing every month, it's a good idea to create a line item in the budget as a sort of "sinking fund" or savings fund.
Then, you can be poised to pounce on those end of season sales at the retailers to be prepared for next season!
Netflix, Hulu, Prime, Costco, Sam’s Club, gym memberships... You'll likely receive no shortage of subscription renewal reminders for these, so it won't necessarily be that you forget to renew.
You just might not have a line item in the budget for each one yet.
A line item is a really good thing to have so that you can set aside money every month, particularly if they're an annual subscription renewal.
No one plans to get sick, but it happens and it sure can throw your budget into turmoil if you're not prepared.
Apart from your regular, expected medications, it's always good to have a medicine/vitamin sinking fund in the form of a specific category or a miscellaneous category.
This allows you to put some money aside for the unexpected "bug" that throws you off your normal routine.
These can be just irregular enough to drive you nuts.
One moment, you're looking dapper as can be, then all of a sudden you're shaggy and unpresentable.
A line item in the budget for this is highly recommended so you're putting aside a little money every month to ensure your presentability.
Trips to the vet can be expensive, even more so when they're for an unexpected event like a sickness or an accident.
Best to have a line item in the budget to prepare for regular check ups and maybe a little extra so you can be prepared for an emergency vet visit.
If you have kids in daycare, you'll want to make sure you've got all of your fees (application fees, renewal fees, extracurricular activity fees) saved for.
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You want to make sure your home is protected from critters.
So, once a quarter or twice a year, you wan to make sure to do this one. A line item or miscellaneous category would be great for this one.
This is the one we mentioned earlier. It's awesome to get out of the "month to month" payment cycle by switching to semi-annual, but the learning curve can be painful if you forget.
Go ahead and make a line item in the bugdet and set aside money for it monthly as though you were still on a monthly bill. That way, when it comes due, you're more than prepared.
HOA, professional organization dues: Much like subscriptions and memberships, the organization collecting the dues will likely send you no shortage of renewal reminders.
It's a good idea to go ahead and either create a separate line item for each set of dues or a miscellaneous category as a "catch all" for them.
Nothing like a nephew's birthday to come up out of nowhere to toss your budget into a panic.
Best to try and calendar birthdays, holidays, anniversaries and create a line item in your budget in order to be able to plan accordingly.
Unless taxes are part of your business model, this is the part you hate the most (me too).
If you're a business owner or side hustler, it's a good idea to set aside some funds monthly for this and to use a tax professional to help you figure out the details.
There will likely be things on this list that are not on yours.
Remember, this is an ongoing process and perfection is not the point. The point is that your budget is a living, breathing document that you rewrite every single month so that you’re never just putting anything on autopilot.
Rather, you’re taking the time to go through every category and every line item regularly to adjust and to make sure you’re not missing the irregular stuff that inevitably comes.
0. Stop All Retirement Investing (Until Step 4)2. Starter Emergency Fund of $10003. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)4. Full Emergency Fund of 3-6+ Months’ Expenses5. Invest A Minimum of 15% Income Into Retirement Accounts (and increase savings rate to 50%+ if possible)6. College Funding (if applicable)7. Pay Off The Home Mortgage8. Build Wealth, Serve, Be Ridiculously Generous And Go FI (Financial Independence)!