Budget Planning 101 - stage 3

Expense Planning


If you're just finding this discussion, you should review the previous lessons:

How to establish your current spending

How to eliminate excess expenses

Now that you have a good idea of where your money is going and have taken the time to sort through and eliminate some of the excess, you should have a positive cash cushion with which to plan. If at this point it is not a positive number, you have some further work to do on stages 1 and 2.

Expense planning almost always goes hand in hand with our stage 4 lesson, saving. However we will cover it first here since it's importance is often overlooked. The sooner you begin thinking about planning for the unforeseen, the better off you will be since you will start to take notice of those non-regular expenses sooner as well, which helps in the planning stage.

In stage 1 you established your current 'regular' expenses, and possible had one or two expenses that popped up out of the blue as well. If you didn't, you're lucky, but don't think you can escape them forever. These types of budget downers are a fact of life, whether it is yearly (or beyond) costs, like car insurance or inspection, or unexpected repairs or health care bills.

The point of this lesson is to get you to think about these things and realize that however unfair life may be sometimes, if you plan ahead, you will not be left struggling to get out of a financial hole once these things do come around, and they will.

• car repairs


• household repairs (appliances, plumbing)


• veterinary bills


• gifts (wedding, birthdays, Christmas)


• unexpected travel


• hospital bills, other medical expenses


• eye care, new glasses/contacts


• taxes, increases in home assessment or school taxes


• speeding/parking tickets

So there are some other expenses to think about planning for before we go on to the saving money stage.

Budget Planning 101 - stage 2

Eliminate excess expenses


You should already be tracking your current spending using the tips from Budget Planning 101 - stage 1

Shortly after starting stage 1 we can begin stage 2, which is to eliminate excess expenses. Stage 1 should have pointed out at least some problem areas with finance charges and other recurring fees. If you are serious about cutting costs and sticking to a budget, you must take control of this area first and foremost.
Work to reduce or eliminate finance charges and late fees. The latter is the easiest to do. If you can set up online bill payment with your bank, this makes it very easy to schedule payments at a convenient time of the month for you. Once this is set up you will worry much less about bills being late. If you are uncomfortable or unable to schedule online bill payment, try to stick with a regular schedule for bill payments. You should be able to sit down every other week and take care of anything due before the next session. Working out a schedule in this manner makes it much less stressful as you will have a set time to deal with payments, and being on top of due dates will reduce daily stress of worrying about what may be due today or tomorrow.
Finance charges will be a bit more work to reduce but it is not difficult to do so. You may have heard that you can simply call your credit card company and ask for a reduced percentage rate. This is still true and only requires the effort on your part to make the call. Remember that the banking industry is highly competitive and if they will not reduce your rate, be sure to tell them you are looking to transfer your balance to another bank for a lower rate. There are plenty of offers out there and consolidation of some accounts while you are at it may also be in order for you if you have too many. This will reduce the amount of payments you need to make, which adds up to less stress and less of a chance to miss or be late with a payment. Take the time and effort to move to financial institutions that work better for you.
Other expenses can be easily eliminated too. You do not have to cut out all the fun from you life however. Some of the easier cost cutting ideas are also good for your conscious and the environment. Research eco-friendly ideas for reducing electricity and gas usage.

For more ideas, you can also use the cost cutting tips listed in budget basics page of Budget Planner.