Are you struggling to make progress on your goals because you can’t seem to catch a break? Are you trying to find extra money in your budget but it seems like every time you do, it’s going towards some random expense you didn’t account for?
Has murphy’s law moved into your guest bedroom where everything that can go wrong, is going wrong? Are you ready to give up on budgeting and just saying, “well…..it is what it is! I don’t make enough to really get out of debt!”
Well, let me help you with this topic. You are talking about PESKY random expenses that seem to creep up on us and cause CHAOS in what should be a stable, well planned out budget! Trust me, I know about these random expenses because EVERYONE deals with them. You do, my clients do, and YES, even I (your favorite financial coach) deal with them too!
So what do you do? Amber Hurdle said it best in her Bombshell Business podcast,
“Control the CONTROLLABLES, because the UNCONTROLLABLES are coming!”
Both the uncontrollable and controllable random expenses are impossible to hide from so it doesn’t matter how good you are with money or how much you make, you will encounter these PESKY random expenses. But…..do you want to know a secret? There are things you can do to be ready for them! Take action on these and you’ll lower your stress, and have peace and stability for the first time!
Save for Uncontrollables
First and foremost, you need to save for the UNCONTROLLABLES. These are things you never saw coming! Like when your son was playing outside, busted his chin open, and needed stitches which led to an unplanned medical bill!
Or last Thursday when you were doing laundry and your washer machine dispensed the Mississippi river all over your home! These uncontrollable things are also known as emergencies. So you need to save for these things because life is going to happen whether you are ready or not. So let’s be ready!
If you have debt besides your home (i.e. student loans, car loans, credit card debt, etc.), then you need to set aside $1000 for emergencies. This should cover a lot of immediate emergencies while you are getting out of debt! So if you are currently putting money towards your debt, then stop temporarily and put that towards an emergency fund. Stockpile $1000 as fast as you can so you are ready for WHEN that uncontrollable thing happens! Once you have the $1000, then go back to paying off and crushing your debt.
Debt free besides your home? Then you need to save 3 to 6 months of expenses for an emergency fund (don’t forget to include money for healthcare). With a fully funded emergency fund, you will be prepared for something big, like a job loss where you need to live off of this emergency fund until you find another job to replace the income.
It is a VITAL step in your financial journey to have an emergency fund because this is the first line of defense in order to have a more stable budget and eliminate the money scramble. But fair warning….UNCONTROLLABLES WILL HAPPEN! So start saving!
NOTE: Are you having trouble saving money? Check out another blog I wrote called Ways to Save When you're BROKE.
SAVE for Controllables
So now that you’ve saved for the uncontrollables, you need to save for the things you KNOW are coming up as well. These are what I call, controllables. Here’s an example.
You went in for your routine oil change and the mechanic comes out saying your tire treads are getting low and you’ll need new tires soon. Now that’s a trigger you can use to start saving for tires NOW.
However, a lot of us wait don’t we? We are like, “yup ok, but what do I owe today.” If you wait until you NEED them, then your stress levels skyrocket and there’s a huge scramble to try and dig up $800 for tires. But guess what, it doesn’t have to be that way! We need to save for controllables items starting NOW!
Brainstorm all the different things you KNOW are coming up! Do you have car repairs, home maintenance, travel, gifts to give? All of these can be categories that you can start proactively saving for to be better prepared for when these things come up.
Once you have your list of controllable categories to save for, you need to determine how much money to fund them. Take the time to really think about each category, and force yourself to look ahead in the year to estimate everything you’ll need for that specific category. Let’s take the GIFTS controllable. Think about all the birthdays coming up and how much you want to spend on each person. Think about all the anniversaries you celebrate, weddings coming up, and don’t forget CHRISTMAS presents! Add up all the estimated costs and that’s how much you need to fully fund that specific category. Repeat this step for each of your controllable categories you created for your family and you’ll have a great first step on understanding how much to put away each month towards these controllables so you can stop stressing and start breathing when these random expenses hit you!
Create Separate Savings Accounts
Create separate savings accounts for all of the uncontrollable and controllable categories you created. So create a separate account for an Emergency fund, Gifts, Car Repair, Home Maintenance, etc. so that it’s all separated out. By doing this step, it will get money out of your checking account so you don’t just spend the money on stuff.
Separating your accounts will also create a spending limit for each specific category. Let’s take the Gifts category as an example. In the past, have you overspent on Christmas or birthday gifts where you had good intentions but busted your budget and scrambled to find money towards the end of the month just to make ends meet? I get that you had good intentions to buy your friend/family nice gifts but let’s be generous gift givers without busting our budgets. By having money set aside in a separate account for gift giving, it creates a spending limit for you so you have less risk to overspend.
Make sure you Label
This seems redundant to the point I made above but I want to be CLEAR. Once you have created your separate savings accounts for the uncontrollable and controllable categories, LABEL each account. By labeling each account, you and your spouse will know what each should be used for and you won’t accidentally spend money that was allocated for something else.
DON'T Touch
By creating separate savings accounts for each category AND labeling each of them, you will be able to see your money clearly.
BUT, I have one more word of caution! DON’T TOUCH the accounts unless you are using the money for what it is clearly labeled for. So don’t touch your emergency fund, unless it’s for a TRUE emergency. Don’t dip into the gifts account unless you are actually buying gifts for other people. You took the time to separate the accounts and save for each category so just label them clearly to have a clear view of your money.
Take Home Message:
Pesky random expenses can be a budget buster and a money goal killer. So how do you get through random expenses without letting them squash your dreams? You need to save for the uncontrollables and the controllables by determining how much to put in each category, creating separate saving accounts for each category, labeling each saving account with a clear name, and NOT touching these savings accounts unless you have an expense related to the category. If you are proactive and take these steps, you will have a LOT less stress, you won’t be scrambling to find money, and you’ll maintain a much more stable budget to actually accomplish those money goals!
Trust me, it's worth it. So if you need help, CALL ME because I know I can help you with this!
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