Ever have one of those budget (Six Dollar Family) moments where you sit slack jawed looking at your budget and realize that a double face palm would never be big enough to cover it? I have plenty of times so I’m pretty sure that you have too. One of the times where I have done this is when I’ve failed to identify a fixed expense in my budget or I’ve failed to “create” a fixed expense. I realize it doesn’t sound like a huge deal, but it is one thing that can actually make your budget easier. Now I could sit here and blame the fact that I’ve been down sick for the last week on my failure to catch myself, but I don’t like making excuses so I’m just gonna admit that I’ve probably not been paying as much attention as I should be.
I want to make it perfectly clear what I mean by fixed expenses. I’m talking about things like your rent or house payment, your car payment, the kid’s karate bill, and so on. These expenses don’t fluctuate too much in cost so you can usually plan on them being the same amount in your budget each month. Variable expenses however do fluctuate. This could be your grocery bill, a water bill, etc. Knowing which of these expenses are fixed and making the variable ones into a fixed expense will allow you to budget for them properly.
I really want to make it clear that this is something that even I have overlooked for I can’t even begin to tell you how long lately. I’m not sure why I stopped working my budget this way, but at some point, I did. Once that happened? Our budget was off the rails, exploding mid-air, kaboom! Dead in the water for well? Way longer than it should have been. Once I realized what was happening, it was a quick fix that put us back on the road to financial recovery.
The catch here is that you need to know what your expenses are before you can start anything so if you’re not actively tracking them? The time to start was yesterday so be sure you get started on it. The idea behind using only fixed expenses in your budget requires that you know approximately what those expenses are to begin with so if you’re not tracking them now, make certain you start soon. Once you’ve been tracking them for a couple of months, you’ll have an idea which expenses are fixed and which are variable.
Once you know those fixed expenses? The fun can begin! Okay, maybe not, but a steady budget can begin. Those fixed expenses can always be counted on being the same. Why is that important? Because it allows you to always know what your bare minimum expenses are.
I know. I can hear you now.
“If I have variable expenses too, how will I know what my bare minimum expenses are?”
The answer might be simpler than you expect. You take those variable expenses, average them and round up.
Say that your child’s school lunch costs vary each week. You know that at most they will spend $15.00 per week. To make that expense a fixed expense, you simply budget $15.00 per week ($60 per month) for them. If they don’t use that much, great! You can roll that money into the next week. If they do, great! Its in your budget and you’re not going to overshoot it. If you do this with every single expense in your budget, fixed or variable, eventually? Something fantastic will happen…
“Okay, you got me..what will happen?”
Eventually? You will build up credits on your bills. CREDITS! That means part or all of your bill paid before it’s due! You will eventually have months where you don’t have to pay a bill at all! Once that happens though? Keep paying that bill. Even if you owe nothing, keep paying it. Why?
Because if you have a bad month, you can use those credits that you’ve built up to cover yourself for a month or two when you might need it most.
Keeping your expenses fixed with the amounts rounded up can help you steady out what might be unsteady in your budget. It might seem a bit silly to some, but doing my budget like this? Saved my finances when I was a single Mom. If it worked for me, it can for you too. You just have to give it a shot.