The 6 things you should be budgeting for but probably never do

 Over years of talking to people about their budgets, I have identified 6 things people completely forget to budget for that throws off their plans:

Gifts – Think about all of the gifts you buy throughout the year for family and friends. Think about mothers and fathers day, birthdays, anniversaries, and Christmas. Even with a small family we are starting to talk some serious cash here.

Health and doctors – We don’t plan to get sick or injure ourselves. We have no idea how much we may or may not spend in any given year, but if you have no health buffer to pay for a random trip to the doctors, then you can guarantee you will be withdrawing from your savings account again.

Even with private health insurance you will always need to pay a gap so have a few thousand per year in the budget will ensure you have the money when you need it.

Clothes – We need clothes, but they often don’t fit into the ‘necessities’ category, and are never budgeted for. People will always spend money on clothes however, and in some cases probably more than they should. Figure out how much per year you need to buy new clothes and put that money away each pay period. That way, when you do go on a spending spree, you will have the money ready to go.

Haircuts – Unless you are a guy who gets a number 3 all over (aka, my husband) then you will be paying to get your hair cut, and that can be very expensive. Whether you go to the hairdressers every 6 weeks or every 6 months setting aside the money for this is a must. As a women who lives in a city, haircuts are not cheap regardless of whether I get a cut/colour/blow dry or all of the above. You can guarantee that every time I will be paying over $100 a pop. If you are blond, I’m sure you nearly get heard palpitations every time you have to pay. This can be a massive expense, so budgeting correctly for this will ensure you don’t ruin the budget every 6 weeks.

Car servicing – Typically when people are budgeting they have enough forethought to work out rego, petrol and sometimes insurance. One thing that is often missed however are the services. If you don’t regularly service your car, it isn’t going to last you too long at all. Factoring this into your yearly expenses is a smart move, and ensures that you can keep your car on the road if something goes wrong.

Holidays – Holidays can be an expense like everything else, especially when you have something specific coming up. Next year, we are invited to a wedding in the Philippines, and while we are over there, we figure we’ll have a holiday too. So say that we want to save $6,000 for this holiday, we need to put away $115 per week towards this expense for the next year to get us there. Most people don’t budget holidays, they just take it out of savings but that’s not really the point.

Savings are usually for something big like buying a house. If you don’t adequately budget for ALL of life’s expenses, your savings will be a constant dipping pool to fund your lifestyle.

I always say that there is nothing wrong with having a great lifestyle including buying clothes and having yearly holidays but you have to include it in your expenses. If you write out a budget and don’t include these things, it doesn’t mean you aren’t paying for it, it just means your budget may as well go in the bin because it means nothing. It is not a true reflection of what you are doing with your money and what you can realistically achieve.

You are just trying to hide the facts from yourself.

By including the above expenses in your budget you will be able to display a true reflection of your expenses but it will also mean that when Christmas comes around, you will have some money ready to go to buy for all your loved ones. It will also mean that next time you hurt your back, you can go to the physio without worrying about where the money is going to come from.

The post is from our resident Financial Planner Cara Brett, check out her details in the About Us section.

Posted in: Cara Brett, and Financial Planning