It happens to everyone, including even the most money-conscious student. No matter how well you think you planned your budget, after a few months, your bank account has less money in it than you expected.
There’s simply no avoiding an unexpected budget-busting expense at least once every few months, not to mention the smaller purchases that siphon off your funds so subtly that you hardly notice.
It may be something serious like a medical payment or a car repair. Or, it might just be your day-to-day habits. But few people can avoid falling off the budget wagon.
The key to overcoming the most common problems is knowing that they will strike. To better prepare, be sure to consider these three budget-busters.
Too Many Memberships
How many recurring subscription-based payments hit your card each month? The answer is almost certainly too many. Are you subscribing to Spotify, Apply Music and Tidal? Are you actually watching Netflix and Hulu enough to justify having both? Do you actually watch the cable service you pay an arm and leg for every month? How many magazines or newspapers do you actually read?
It can be all too easy to let $9.99 slide by month after month, rather than calling the company to cancel. But many people are throwing away $100 or more per month this way, simply letting the inertia of past sign-ups accumulate, which prevents them from reaching their goals. This can add up to thousands per year — forcing you to miss out on vacations or toys you really want.
One drastic solution is to cancel (virtually) everything right now. Then, try to live your life for a few weeks and figure out which services you actually miss. Maybe Spotify and Netflix both leave a big hole if your daily life. If that’s the case, renew those or other services you really need. But chances are you won’t even miss most of the rest.
Car Repairs and Other ‘Emergencies’
One good way to strengthen your budget is to look over old transactions from the past year. Chances are that you will find a sudden auto repair or maintenance cost that you completely forgot about, especially if you’re driving your parents old, clunky car.
One way to avoid this coming as a surprise the next time is by planning ahead. Wait for a good deal and then buy replacement parts that you know you will need in bulk. TireBuyer, for example, offers a discount to anyone who purchases a set of four select tires.
It’s also best to save for these things in advance. Many financial advisors recommend maintaining two savings accounts: one for your general goals and another for emergencies. Your current financial situation will determine how much you can reserve for this fund. But your objective should be having at least a few thousand dollars squirreled away. Because while each “emergency” comes as a shock, you know at least a few unexpected issues will strike every year. Be ready.
The Small Stuff
While a busted transmission or broken water heater is an immediate, obvious calamity, many people find themselves confused when they blow their budget every month. That’s because they fail to realize just how much they are spending every week on coffee, snacks or parking. If you’re going out to eat every night for $5 fast food, or hitting the bar every Friday to hang out with classmates, it’ll add up by the end of the month.
This doesn’t mean you need to cut out your less-memorable day-to-day expenses altogether. But you do need to account for them. The best way is to dedicate some time — at least one month, but ideally three — to being super-vigilant about everything you spend money on. This even includes times when you spend $1 on a parking meter.
After tracking it for a period, you can stop sweating the tiny stuff. But you will develop an ability to predict this “petty cash” outflow each month and just add this $50 or $100 or $200 per month into your budget as “miscellaneous.”