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.
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