Do You Feel Like You Get Hit For 6 Whenever A Big Bill Comes In?
Do big power bills, vet or dental bill sidetrack your savings goals? Maybe your hot water system or fridge breaks down – and there’s a $1200 to $2000 cash outlay right there to get a new one.
You might be earning really good money, so you SHOULD have the money available for when things like this happen, right?
The truth is that most people are not factoring all of these so-called ‘unpredictable’ expenses into their budget.
They’re just factoring in the things that they can see right in front of them, whether they’re bills for this month, or sometime in the next year.
Most people are not factoring in the replacement cost for items they use daily – like computers, cars, or white goods etc.
They’re also not factoring in longer-term things they might want to do – like being able to pay for, or at least contribute to, a child’s wedding, or put their kids through university.
For most people budgeting looks like looking at their bank balance to see if they have enough money to do something right now.
And if they don’t have the money for it they get a credit card or a loan or AfterPay to address that need or want.
The problem with that is that it will ALWAYS bite you in the butt down the track as you have less and less available cash to accumulate for the unpredictable things.
That’s how we ended up in trouble. It’s how some our clients end up with $5k to 95K worth of unsecured debt.
Even people who have an excel spreadsheet budget usually don’t factor in these kind of unpredictable or long-term expenses.
But let’s face it, these expenses are actually going to happen.
So here’s some tough love:
It’s time for you to lift your head out of the sand and face the fact that you’re being a child about money.
Being an adult is about looking ahead and planning your spending for this month, this year, and into the future.
Do you have a minimum of $2.5K sitting in an emergency fund bank account? Do you have cash in another account building up for those unpredictable or long-term expenses?
Are you an adult or a child when it comes to managing your finances? If you’re a child that’s okay – I was a child up till 10 years ago (and that’s why we were in such a huge financial hole – I get it) – but what’s your plan for becoming an adult?
Thumbnail Image by Circ OD from Pixabay
Hi Anthea, After listening to and reading your blog “Blindsided by Unpredictable Expenses” I recognised that I was not fully grown up. When you assisted me to set up my expenses in the Spending Planner I had been reluctant to document all the unpredictable expenses that I actually knew about. So I think we got 5 or 6 of them in and I was happy with that at the time. However, I was not being honest – even with myself – about the cost of running a household because I didn’t want to and didn’t think I could afford the actual cost. However, I have now done a full review of all the major appliances in my home and estimated their cost and when they will need to be replaced. They are now all in the Spending Planner and guess what? I will survive! And I will have the great comfort of knowing I have funds on hand to purchase those big items when the time comes instead of having to rely on credit cards as I have in the past. Even at my age (undisclosed) I actually feel so much more grown-up now I have taken responsibility for those long term expenses. The Spending Planner just gets better and better the more I get involved and understand it’s capacity. Thank you for writing about this and for hitting my guilty nerve.
Hi Julie,
I’m just so happy that you’re seeing the amazing benefits of using the Spending Planner and good on you for trusting the process, being bold and actually facing reality. It’s so empowering to do so, isn’t it?
Wonderful work.
Anthea