Performing Budget Triage

If you are just beginning to budget you will quickly face something that the rest of budgeters have long been acquainted with: the unexpected monthly expenses that do not fit into your categories. Examples include an unexpected car repair you need to make in order to pass inspection, an opportunity that wasn’t available before that you would love to take advantage of, an appliance breakdown, unplanned doctor visit and antibiotic, etc. When this happens, it is easy to throw your hands up in the air and give up in the name of a force greater than yourself which you are convinced will continue to sabotage all of your saving efforts (forget about the fascination our culture seems to have with the sock gremlin who lives in the dryer; I’d love to get my hands around the neck of the money gremlin). But don’t give up just yet!

You may be tempted to tap the emergency fund to rid yourself of these money gremlins. But this is not necessarily the best answer as the money gremlins tend to just keep coming; if you tap the emergency fund every time you are in a pinch, your fund will disappear. There are many strategies financial experts have developed in order to protect you against these expenses that seem to come out of nowhere. My favorite one is the idea of opening a spillover account (separate from your emergency fund) where you budget a certain amount each month to be deposited into as well as sock away any leftover budget from less expensive months. The next time an unexpected monster from the depths of the black hole promises to wreak havoc on your budget, you simply take from your spillover account, and voilà: your monthly budget is unscathed.

I’d like to offer a few other ideas that are timeless and very effective in allowing you to meet your budget goals each month. In fact, you have probably used each of these at one time or another, so this might just serve as a good reminder that you do not always have to cave into needs and wants (I include needs because many times we perceive wants as needs).

  • Substitute: This approach is great because it won’t lead to a feeling of deprivation, which is bad for both budgeting and dieting. Your need/want is still being addressed which means you are reaching satisfaction, just not the way that you had originally planned. In order to be successful with substituting, make sure whatever you substitute with fulfills not just the physical form of the need/want, but also the emotions of it as well. What do I mean by this? Let’s say you have an impulse to shop. If you choose to stop shopping cold turkey, you might binge shop one day. If instead you substitute with a trip to the 99 Cent Store when you get the urge, then you might just spend $5 and fulfill that need. I am not suggesting purchasing things for the sake of accumulating items, as that is wasteful. But if you purchase a few items that you have a purpose for either now or in the future (physical form), this will fulfill your impulse (emotional aspect) while allowing you to remain on budget. Craving some comfort desserts? Bake your own at home instead of heading out to a cupcake boutique, ice-cream shop, or adding dessert onto a restaurant bill. If you are out of shape and motivated to begin exercising, take advantage of the great outdoors or an exercise video from the library instead of signing up for a new gym contract. With each of these examples you are getting the satisfaction you crave, just in a different (and cheaper) way.
  • Borrow: If you have a one-time need, then borrowing from someone else could be much more cost effective than purchasing for yourself. For example, my husband takes care of mowing our lawn. He borrowed an edger from his brother to trim all of the edges along our walkways because he will only need to do so once a year (thank you Matt!). If you are taking a trip to another country, then borrow a travel book from the library or a friend instead of buying one. Remember that other people will most likely want to save money by borrowing as well, so be open to lending to them in reciprocation.
  • Delay: If you can delay your gratification then you will give yourself more time to save and budget for the expense. Even if you cannot save up any additional money for it, delaying until the next month or several months from now means that your budget for that category is reset and you can stay within your limits. For example, instead of splurging on new sneakers right now, try a pair of foot inserts to breathe more life into your current pair (this has worked for me in the past).
  • Do Without: If you have the luxury of choosing to do without (i.e. it’s not a medical need or a true need at all), then you should give this option some thought. I have heard that some people with impulse shopping addictions try to change their behavior by going home for two days instead of purchasing something right away. If in two days they still want it just as much, then they make the purchase. Most of the time they probably forget about it or have moved their desire onto something else.

Honestly, I could imagine ways to throw off my budget all day long and I am convinced life would still throw out something I had not even given a moment’s thought to. But Paul and I still budget because we have learned that giving your money a purpose will allow you to save more of it than if you had given it no purpose at all.

2 comments… add one

  • Great post, very practical advice! Even large corporations using sophisticated budgeting techniques use “spillover accounts,” because EVERY budget is subject to unanticipated expenses. The only difference is that instead of calling them spillover accounts, they use a very advanced, technical term for them: “other.”
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