What’s not in your budget that should be

A common mistake with doing a budget is leaving things out. One of the reasons people don’t do a budget is because they think they don’t work. And here’s why.

Whether a budget is new for you or not, all it really is is a plan for your money. Most of us wouldn’t build a house without a blueprint, yet we go through year after year without planning where our money goes. For many, 3 or 4 years of income is about the same as the cost for building a house. Make a plan, but more importantly, don’t leave things out. Your plan should include everything that involves your money throughout the month.

Common items we forget to include in our budget:

Car repair and maintenance
The most common thing we leave out of our budget is car repair and maintenance. As long as cars require engines and tires to run properly, maintenance will be required. So add it to your budget. we have standing categories in our budget that include tires, oil/gas, and replacement. The money is automatically drafted into our ING account so it’s there when we need it (with the exception of oil/gas).

If you have a beater for a car, you might need to set money aside for other repairs like parts and service.

Birthdays and Christmas
Make a list of all of the people you plan to buy presents for. Birthdays might seem like small expenses, especially if you only buy cards or gift certificates. But $2 here and $10 there adds up throughout the year. So put a little money aside for these expenses either in an envelope or in your savings account so it’s available when you need it.

With Christmas gifts, we simply decided what we would spend on presents, divided that by 12 (there’s 12 months in a year) and set aside that money every month in our ING account. Now, there’s no worry about bills. It’s all done.

Vacations
It seems that the art of saving for vacations is lost nowadays. For us, because we don’t use credit cards, we know when we want to go on vacation, how much we’ll probably need, and save each month for it.

Our 10th anniversary is coming up in 2008 and we have already started putting money into our ING account for it. We have no idea where we’re going just yet, but we knew about how much we’d like to spend.

Remember, the best vacation you’ll ever have is one that doesn’t follow you home.

Clothing
It’s an absolute must to allot some of your monthly income toward the purchase of clothes. Especially if you have kids. They grow like weeds and this way, you can buy clothes that will fit. A good rule of thumb, to avoid clutter, is to donate or sell clothing items as you buy new ones. (This works for toys too.)

Furniture replacement
This is a big one. Furniture, quality furniture, is not cheap. If you know you’re going to need a particular item or would just like to have something new, how about saving a little bit each month for it? Remember, 6-months same as cash really isn’t true. Why not save a chunk at a time for 6 months and buy what you need or want. Then you don’t have to worry about where you’re getting the money when the 6-months is up and avoid paying the 36% interest rate tied to those deals.

With the new year upon us, take a look at your budget and see if these tips will make your life easier. I bet they will.