4 Ways I Learned To Budget For The “Unbudgetable” Expenses

Adulthood is fraught with expenses that I, for one, never considered before I entered the so-called “real world.” For years, I lamented these expenses whenever they presented themselves. They always sprung up on me, and since they didn’t occur monthly, I acted as if they couldn’t be budgeted for when that is, in fact, not the case. Now, I approach these expenses much more proactively. With a savings account, an Excel spreadsheet, and a commitment to managing my financial life, I now have the money on-hand for that unexpected medical bill that just came, the baby shower gift for one of my best friends, or a big clothing investment purchase. Here’s what I did to be prepared for the “unbudgetable” expenses in my life:

1. I created categories of expenses.
I thought about the kinds of expenses that have snuck up on me in the past and made me curse, because I didn’t have the money to cover them. These are things beyond utilities, car insurance, groceries, etc., which are covered under my normal monthly budget. The categories that I came up with are:

Medical: This covers co-pays for doctor’s visits, medications, new glasses, and a cushion for unforeseen medical emergencies.

Veterinary: My dog and cat also need annual exams and vaccinations, medications, occasional emergency visits, etc.

Automotive: This is for routine maintenance, windshield washer fluid, car registration every other year, excise tax, etc.

Clothing: I’m not big into clothes, and therefore, I don’t see this as a monthly expense, but I do want to make sure I have money when I decide that I need a new pair of shoes, a nice raincoat, or whatever.

Weddings/Showers: I’m at the age at which all my friends seem to be getting married and having kids, so even if I don’t have any save-the-dates at the moment, I need to be setting aside money monthly for weddings I’ll need to attend, or adorable baby outfits I’ll inevitably have to buy for other people’s children. 

Christmas: I am DONE panicking in November because I didn’t save money for Christmas presents, and my friends and family shouldn’t have to suffer because of it. Setting aside some money each month is much easier, and it’s healthier for my budget.

Vacation: I’m not at a point in my life where I can take big international trips anymore, but it’s important to me that I set aside money for the occasional weekend getaway and the like.

Miscellaneous: I add and subtract categories as savings goals are set and met, like a new computer or dog-training classes.

2. I determined how much to set aside (for each of my categories).
I used Excel spreadsheets to break down how much I needed to be putting in each one of my “unexpected expenses” categories. For instance, for veterinary expenses, I went through my records and made a list of everything I’d spent on vet bills in the last year. Then I forced myself to look one step further, at how often I need to spend on that line item going forward; wellness exams are once a year, certain vaccinations are good for three years, flea and tick protection is purchased for four months at a time, and a pack of heartworm pills lasts six months, etc. Using this information, I did the math for the annual cost, and then divided that by 12 to figure out how much I need to set aside every month in order to cover those purchases that happen at different, but predictable, intervals. Voila!

Then, since my dog always seems to encounter veterinary emergencies, I used the same methodology to calculate out how much to save each month for one big (~$600) emergency each year. Adding the monthly cost for the guaranteed annual expenses, plus the hypothetical emergency, I determined how much to save for the “vet category.”

This precise methodology was easier with some categories than others, and there was always some guess work. For automotive expenses, I had the records of things like oil changes and tire rotations to rely on, but I also sought advice on what other expenses to prepare for, given the age and mileage of my car. Using that additional information, I calculated the cost of a set of four tires before next winter, and a new battery within one year.

For weddings, I thought about how much I recently spent for a single wedding on (1) a bridal shower and wedding gifts, (2) a dress and related beautification products and services, (3) a hotel and travel expenses, and (4) miscellaneous other pre-wedding activities and expenses, like buying and drinking bottles of wine with the bride, so they could be turned into Pinterest-worthy centerpieces. This total calculation became my new standard, and being that I know several couples (five, at most recent count) who could get engaged any day now, I need to be putting at least a little something into the wedding fund each month. Once one of my friends sets a date, I’ll be able to calculate by how much I need to accelerate my saving for this category, but being prepared in the meantime helps narrow the gap. Similarly, baby showers will continue to pop up on my calendar, and given my goal to be the coolest honorary auntie, I need to save up some money to give some pretty sweet gifts.   

3. I established a dedicated savings account that I don’t touch right now.
Some banks allow you to easily create multiple savings accounts, but I just use a single savings account that’s attached to my checking account. While this isn’t perfect, it’s much better than letting this money sit in my checking account, because I know that this money is specifically dedicated to savings. I have a separate account with a different bank that holds my emergency fund and the money I’m saving to make a down payment on property, so these accounts are never confused.

4. I track my expenses, and always know what my account balances are.
I maintain an Excel workbook that has a sheet for each month of the year. A set sum of money (based on Step #2) is automatically deposited from my checking account each month, but it’s through the Excel sheet that I allocate the money to my different categories. I try not to allow any category to be in the red, but if it happens, I don’t allow myself to reallocate between the categories (if I can help it). Instead, I look for ways to limit those expenses (which works for something like my clothing category, but not for categories like veterinary expenses). I can also add more money to these categories by picking up additional side hustle work. 

Using this system has been a huge mental relief for me. Knowing that I have money for these previously “unbudgetable” expenses means that I am no longer tempted to ignore that “maintenance required” light in my car, I can replace my glasses when they break without impacting my monthly budget, and I don’t have to decline important wedding invitations due to lack of funds. To me, that’s basically winning at adulthood.

*Willa prefers to use a pen name.

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