Just Because It’s Not In the Budget Doesn’t Mean It’s an Emergency

emergency situation

A friend of mine has been freaking out the last couple of weeks because her oldest child is graduating from high school this year. While she’s thrilled about this, she’s worried about the money.

“I’ve got to get him a gift and throw him a party. I don’t have the money right now, so I’ve got to raid our savings account,” she said. She failed to plan for this expense that she’s known about for years.

I’ve got another acquaintance who worries every time the oil has to be changed in her car.

“I just don’t have the money to cover it right now,” she wails and then breaks out the credit card. It’s not that she doesn’t have a budget, it’s that this recurring expense never seems to make it into the budget.

This is a common financial mistake, even amongst people who have budgets. People fail to plan for regular and expected expenses that they know are coming up, leading them to raid their emergency funds or take on debt to cover it. Some examples of things that aren’t emergencies, but which many people don’t include in their budgets:

  • Birthday/anniversary/graduation gifts.
  • Christmas and holiday gifts and decorations.
  • Oil changes, new tires, and other routine car maintenance.
  • Basic home maintenance such as replacing air filters, re-staining a deck, yard maintenance, and pressure washing the exterior.
  • Charitable contributions.
  • Small trips, such as visits to family that you don’t consider “vacations,” but which cost money nonetheless.
  • Pet expenses.
  • Cash expenses. This includes all of those little things you pay cash for on a daily basis like tolls, parking, coffee, one-item pick ups at the store, etc.
  • Subscriptions and dues.
  • Back to school shopping and other school expenses such as field trip fees, science projects, and lunch money.
  • Haircuts, manicures, and other personal care items.
  • Summer and other child activities. Include camps, sports, and trips out with friends.
  • Copays. You probably budget your insurance, but do you include the copays for your physicals and prescriptions?
  • Items that are not groceries. Many people assume that the grocery budget covers things like shampoo, non-prescription medicines, first aid, and cleaning products, but these things really need their own tracking system.
  • Household office expenses. Most homes now have some sort of home office and you need things like ink, paper, software upgrades, stamps, envelopes, and other items to keep it running.
  • Fees. Bank fees and any other fees you have to pay need to be accounted for.

These types of things are not emergencies or large expenses, and they’re not even unexpected. You know that Christmas comes every year, for example, that your kids will graduate this year, that you have to pay membership dues to your professional organization, or that cars need their oil changed at regular intervals. Unlike large expenses such as appliance replacement, vacations, medical problems, and emergency repairs, these little expenses won’t destroy you financially in one swoop, but they will eat away at your security if you aren’t prepared for them.

It’s great to budget for the main categories such as utilities, rent/mortgage, insurance, food, and clothing, but any budget you make also has to account for all of the other expenses that come up in everyday life. Otherwise, you’ll always be reaching for the credit cards or savings account to cover them. This is a mistake because these are not emergencies or unplanned expenses (which is what the savings account is supposed to cover). They are things you can plan for. These everyday expenses may not be alarming or seem that huge at the time you’re paying them, but if you don’t have the money set aside for them, they will eventually destroy any chance you have to get ahead financially.

(Photo courtesy of Taber Andrew Bain)

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7 Responses to Just Because It’s Not In the Budget Doesn’t Mean It’s an Emergency

  1. wanda says:

    This is something that it took me awhile to learn. Although I’m getting a lot better at it, I still find that I don’t budget for everything that I should. My solution was to create a “oops fund” for these times. It’s separate from my emergency fund, and anything I have to use it for, I also have to add to my budget. I don’t use it nearly as much as I did when I stated it and it was a great way to add all these things to my budget so they don’t come back to bite me as they have in the past.

  2. Heidi says:

    We can’t help but commit financial mistakes even if we are careful. You are right. It is necessary to plan for expenses so we do not have to empty our emergency budgets. However, it may be time consuming as you have to list down categories and details. There’s a lot to learn and it entails patience on our part.

  3. jim says:

    You’re absolutely right, but I can relate to that mom. Sometimes when you’re raising kids and working so hard you can “forget” that you’re going to need extra $ for something – like a h.s. graduation. Sometimes you’re just too damn tired to plan for everything. And when your kid makes it to one of those great lifetime achievements, it’s only natural to want to give him/her the “best”.

  4. gregory says:

    An important lesson that all need to learn. It’s forgetting these expenses that can break budgets.

  5. Minny says:

    I do the same Wanda. Impossible to budget for every little (or big) thing so we put away cash in a general account. Works for us.

  6. Gailete says:

    I am always amazed at the folks that are completely unprepared for Christmas which falls on Dec. 25th every year. I’m not meaning just presents, but they seem to not have any Christmas decorations from year to year when you see them on the news bewailing about how they just don’t have any money to buy these things. Nor do they have food unless someone brings them a food basket (what would they have been eating if someone didn’t bring them the food?) What happened to last year’s decorations and ornaments? Many things can be made by hand, lots of books in libraries that tell you how and they don’t cost a lot. Cookbooks from the library can also tell you how to cook using basic ingredients so you can still have a nice meal. They also seem to think that even while living at the poverty line they should be spending money on presents at the same rate as upper middle class folks. I still remember hearing a couple over 20 years ago tell their sister how they had spent $800 on Christmas presents (I think the deal was one of those ‘the kids deserve it’ nonsense reasons). I nearly fell off my chair. I was making probably more than double what they did and yet I spent only about $100-200 ( and still do!) for Christmas as I have never seen any reason to waste money like some do, especially as Christmas has a different meaning to me than those that just see it as a time for presents, food and drinking.

    Christmas is very much not an emergency!

  7. Chinweike says:

    I always use myself as an example of how difficult it can be to plan for little things. I am an accountant and still struggle to include some basic items in my budget.
    Human beings will always be what we are. I have never included hair cost in my budget.
    Well written.

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