Miscellaneous Expenses Can Break Your Budget Into A Million Pieces.
Budgeting numbers is fairly easy as it’s basic math however when it comes to miscellaneous expenses things can get tricky.
One of our biggest budget expenses for the year that is variable is our miscellaneous expense category.
For some of you, this budget category might be called a “Slush Fund” but realistically you can call it whatever you like.
You can build a miscellaneous cost into your budget every month and if you spend less than that amount take what’s left and put it into your bank account (slush fund account).
For months that you spend more in the miscellaneous expenses category, you take money from the slush fund.
The only problem with this is that you have to watch how much money you have in the slush fund and what you’re expensing.
Miscellaneous Expenses Are Unbudgeted
What are the miscellaneous expenses?
Years ago I had a fan reach out to me and ask me why our monthly miscellaneous expenses were so high some months.
To be honest it wasn’t until then that I really took a look at that category with deeper thought as we took it for granted.
Basically, anything that didn’t have a home got stuffed in the miscellaneous expenses category which was kind of lazy of us.
Not lazy in a sense where we weren’t monitoring our monthly expenses but tracking why these miscellaneous expenses were happening.
I was able to explain to the reader why we put the items into our miscellaneous category however that’s where it ended.
6 Months Of Tracking Our Miscellaneous Expenses
Both Mrs. CBB and I have been testing our new miscellaneous expenses tracking log for our monthly budget.
Although planning ahead for bills that you know will arrive these types of miscellaneous expenses kind of hit you in the face and sometimes all at once.
I wanted to give tracking our miscellaneous expenses a solid 6 months of tracking to see how we could improve our budget.
Sometimes we’d find items such as birdseed from Costco, Mulch, Government documents (PR Card, Passport, Passport photos), etc that we had never considered before.
By tracking our miscellaneous expenses we knew that we would need to include birdseed into our home maintenance category.
We would buy 4 bags a year from Costco at $15.99 a bag which we now factor into our monthly budget.
Since mulch falls under home maintenance that’s where we will include these expenses next budget update round.
The government documents were one-off expenses so there wasn’t much we could do with them.
These types of expenses would be considered legit miscellaneous for our budget and left alone at this point.
However, the Passport and PR Card and even my education expenses for University that wasn’t expected all needed a home.
For the next year or so, I’ll be paying for upgrading my University degree.
This expense will fall under Membership, Clubs, and Sports since it is part of a membership requirement for my employer.
Your budget categories only need to make sense to the user and nobody else.
As long as you know what goes in each category that’s all that matters.
Understanding Your Miscellaneous Expenses
In our world, miscellaneous expenses are those that you don’t plan for but end up spending money on.
A trip to Costco might yield you some garden plants that you hadn’t budgeted for or perhaps a speeding ticket.
One might suggest tracking your speeding ticket under vehicle maintenance and expenses however if you don’t budget for that speeding ticket you’re spending too much.
Not only that but unless you’re tracking expenses in every category you won’t know that you slid that expense in.
Although a speeding ticket may only be a one time expense it does fall under miscellaneous expenses as it wasn’t expected nor budgeted for.
The Costco garden plants again have no home in your budget unless you stash them under home maintenance but is that really where you want to put them?
Ideally, I’d put them under miscellaneous expenses and track that expense so at the end of the year I can review them.
How to Review Your Miscellaneous Expenses
The first question I would ask myself is whether or not the expense was a one-time expense or a yearly expense.
By doing so you know whether you need to budget for this expense or not when you re-evaluate your budget.
For example, if I find that we spent $200 on plants for our garden that we had not budgeted for I’ll consider whether we should
Add a gardening section to our budget that would include seeds, pots, soil, plants, etc. but as a projected expense. This is an expense we know we will have at some point in the year. In this case, it would be a Spring or Summer expense so we would take $200/12 and save $16.65 rounded to $17 each month. When the time comes we will have most or all of the money saved in our projected expenses savings bank account. Increase our Home improvement or maintenance budget category for the following year and drop the expense here.
What you are doing is taking what started as miscellaneous expenses and deciding whether they are projected expenses or monthly expenses.
I don’t know anyone who buys plants every month unless plants are a hobby so I’m going with projected expenses for this example.
You’ll find that as you get better at understanding your monthly budget and how it fits your lifestyle that you’ll see the importance of tracking numbers and shifting categories.
Types of Budget Expenses
When it comes to budgeting I believe there are 5 types of expenses to consider based on budgeting needs:
Fixed Expenses – One of the easiest to budget for as these expenses are always the same. Variable Expenses – Expenses where the bill can increase or decrease based on variables. ex: Electricity. Projected Expenses or periodic expenses – Expenses that are periodic throughout the year. Discretionary Expenses – These expenses are classified as non-essential ‘wants’ rather than ‘needs’ or items you can get by without. Miscellaneous Expenses– Those expenses that don’t have a budget category home
You could also classify the above expenses as discretionary expenses and essential expenses.
In the personal finance world essential expenses are fixed, variable, and projected expense.
These are all of the expenses that you must pay for no matter what.
However, discretionary expenses are those that you don’t need but spend the money on anyways.
Your budget may allow for discretionary expenses and there’s nothing wrong with that as long as you can afford it.
Some examples of discretionary expenses you could lower or eliminate may by;
eating out adult allowance child allowance alcohol entertainment gifts make-up, spa, hair care above cut and wash (beauty)
video games, DVD’s, cd’s
If we consider all of the above examples you can easily chop or trim these expenses if you are running on a tight budget.
It’s not to say that you shouldn’t allow yourself these types of expenses because if they fit your budget then great.
However, there are times such as the current pandemic crisis where slicing and dicing may be necessary.
Should you track your discretionary expenses?
Short answer, yes because it makes it easier to weed out the expenses from most important to non-essential.
Tracking your discretionary expenses by listing them from most important to not too important will be a valuable resource for when and if needed.
The advantage of tracking your discretionary expenses is that if you must trim your budget, this is where you start.
For example, if you face job loss or income cuts for whatever reason you will have the financial data at your fingertips.
Basic Budget vs. Expanded Budget Categories
When it comes to your budget categories you can create an elaborate budget or a simple basic budget.
The choice is up to you and how much data you want to receive from your personal budget.
Basic budget expense categories include;
housing food healthcare transportation
These are what I like to call, “condensed budget categories” that are must-haves to survive.
Expanded Budget Categories List
As you will notice above on our free budget excel spreadsheet there are many budget categories.
We chose to expand our budget categories as much as possible so we could retrieve critical data.
Over the years we’ve seen our budget categories increase or change based on the end of year data from tracking.
You’d be amazed at how much money gets funneled into miscellaneous expenses which are those you don’t budget for but classify as essential or discretionary.
Personal Miscellaneous Expenses Examples
What are some examples of miscellaneous expenses?
Party Food which could transfer to projected expenses IF you know you will participate in a Super Bowl Party every year. Catch my drift? Weekend Trips – Unplanned could be included in a holiday budget category (consider increased petrol) Broken Cell Phone, TV, computer, lights or replacement products Racoon broke into your house and you called in the professionals Charitable Donation (how often are you donating and should it have a dedicated budget category)
Just remember that miscellaneous expenses are those that are unbudgeted or unplanned with no budget category home.
Don’t beat yourself up about your budget categories as it’s a life-long learning process.
Even we continue to learn about our budget and how to improve the balancing act.
However, by tracking your numbers in certain budget categories helps improve the relationship you have with your money and budget.
Download your Free Miscellaneous Expenses Tracking Sheet
Discussion: How do you handle your miscellaneous expenses each month and do you track them?
Leave me your comments below as I’d love to read your experiences.
The post How To Budget For Personal Miscellaneous Expenses (Free Budget Binder Printable) appeared first on Canadian Budget Binder.
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