For you to effectively spend less money every month ( that is one of your goals, isn’t it? ), you’ll need a solid budget. And the only way a budget works is if you stick to it, and there aren’t any unexpected expenses. Considering the fact that you generally don’t see unexpected expenses coming ( hence the name ), what can you do?
First, you need to sit down and think about what sort of extra expenses may come up over the course of the month. Two big ones that spring to mind are auto repairs and medical bills. Both of these can be crushing expenses, but they can be headed off without too much trouble.
Let’s start with medical bills. A $10,000 medical bill ( not unheard of for even a minor procedure ) can be budget-killing to most everyone – that’s a lot of cash. What can you do about it? Make sure you carry adequate health insurance. Yes, health insurance is expensive, and gets more expensive every year. But those few hundred dollars every month will make sure that you don’t get hit with a 5 figure doctor’s bill. Your medical expenses won’t disappear entirely – nearly all insurance policies require you to foot part of the bill. But the majority of your costs will be paid by your insurer, which takes the weight off your shoulders. It also helps you stick to your budget.
The auto repair side is a touchier subject, and one I’ll touch base on later, more in-depth. But imagine for a moment that you’re driving to work in your 1991 Ford Taurus. It’s been a relatively trouble-free car, but it has 175k on the odometer - it’s no peach. All of a sudden your timing belt snaps and all sorts of bad things happen to your engine. After getting your trusty Taurus towed to your mechanic and checked out, you’re presented with an estimate for $2,000 to fix the damages. That is, of course, not counting the tow truck bill, or your missed time at work.
What could you have done differently? Well, not driving a 1991 Taurus with 175k would be a start. A newer car with less miles would be much less likely to fail, and would probably be under warranty if it did. There’s a good chance that you’d need to finance the car, and deal with the resulting car payment, but it’s much easier to budget for than unexpected repairs. And sticking to a budget is one of the most important steps to a better financial place.
