How to Budget for Big Expenses

Big expenses can sometimes surprise us at the most inopportune time. Whether an expensive car repair or a home maintenance emergency, some costs can dumbfound you, especially if you are not prepared.

The Power of Planning 

If you hope to gain more control over your expenses and start working toward your financial goals, you need a spending plan. One such plan will help divide your upcoming expenses correctly and estimate how much you’ll have to save.

Start by adding up your regular expenses (how much you spend per day). Then think about your financial priorities beyond your monthly expenses, such as building an emergency fund, saving for retirement, and so on. You need to factor in a lot of things to plan your budget and prepare yourself for upcoming expenses.

Another thing that will undoubtedly help is cutting expenses. Although it is essential to consider all of your monthly costs, eliminating large purchases may also help. On average, we spend most of our money on food, housing, and transportation. With that in mind, consider your major expenses and see what you can do to reduce your costs. You can start by comparing electric providers and natural gas providers to find the cheapest electricity plan that best fits your needs. 

When it comes to food, you can also make some restrictions, such as limiting dining out, avoiding delivery service, considering cheaper stores, and so on.

Reducing costs in some areas can have a significant impact on your budget. You will not only save money but also be prepared to face any big expense that comes your way.  

Create a Bare-Bones Budget 

A bare-bones budget is a financial plan that takes your spending down to the essentials necessary to survive. 

Generally speaking, a bare-bones budget includes:

  • Food (essential grocery products)
  • Housing 
  • Utilities 
  • Electricity (Find the cheapest electricity provider that fits your budget)
  • Insurance payments (life, auto, health, and disability insurance premiums)
  • Phone 
  • Debt repayments (the required minimums only)
  • Family expenses (school, daycare, alimony, or child support)
  • Personal care (work clothes, toiletries, medications, and so on)

The bare-bones budget doesn’t include entertainment spending, clothing, cell phones, restaurant meals, vacations, and non-essential personal care such as manicures, cosmetics, massages, and so on. 

Here are great money-saving tips to help you create a bare-bones budget on your own:

Nail down your expenses from previous months

Put all of your regular costs into categories and add them up. Some groups may include utility bills, food, clothes, transportation, restaurants, and rent. Figure out how much you are spending and whether you can make any reductions.

Cut unnecessary expenses

Once you’ve categorized your costs, it is time to decide what you could live without. Essential expenses are things like your rent payment, transportation costs, utilities, while non-essential expenses are restaurant dinners, new home decor, clothing for work, and so on.  

Dig deeper

When creating a bare-bones budget, chances are you’ll find yourself on the fence about some irregular expenses. The point of this budget is to include the essentials only – food, shelter, and necessary expenses. 

Whether you are learning to live on a smaller budget, pay down debt, or want to save as much as possible, your new bare-bones plan can help you get there. 

Be More Mindful of Your Spending with These Money Saving Tips 

Sometimes, the hardest thing about saving money is getting started. These budgeting tips can help you develop a simple strategy so that you can save for your short- and long-term financial goals.

Write down your expenses

Keep track of all your weekly and monthly expenses, including household items, coffee, cash tips, and so on.

Cut your spending 

Look for ways to save on your monthly expenses. Use online resources to find the cheapest electricity provider, low-cost events to reduce entertainment costs, cancel subscriptions, commit to eating in instead of in a restaurant, and so on.

Wait 24 hours before you click “buy” 

Find a way to help you suppress your impulse purchases. One way is to wait at least 24 hours before spending money on things that aren’t essential. 

Get creative with gifts

Find DIY ways to express your love to family and friends. Most people will appreciate the thought behind the gift, so don’t be afraid to get creative and find ways to celebrate holidays and birthdays with low-cost presents. 

Swap music, books, or DVDs

Share your music, movies, and books with friends instead of buying them. 

Take advantage of online coupons

There is nothing wrong with couponing. Take advantage of websites that tailor coupons to your needs and interests. 

By planning ahead of the significant expenses, you can feel secure knowing you have enough to cover them. The more you plan, compare, and prepare, the less likely you will be surprised by any expense.

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