The Most Common Budget Busters That Can Derail Your Financial Plan and What to Do About Them (Plus, a Free Download!)

We are continuing our journey to free you from debt by diving in to the much-loved topic of budgeting!

We have come a long way on this journey.

We started with a promise and getting your spouse on board. Next, we clarified your current financial picture and reviewed the checklist for a strong financial plan. Then, you got clear on your goals, started tracking your spending, and created your payoff plan.

But we’re not done yet!

The idea of budgeting can be overwhelming, but I strongly believe that everyone should have a budget.

There are several factors to consider when creating a budget that is realistic and will help you reach your financial goals. Over the next few weeks, I will take you through the steps to create a budget that will work for you and your family.

Budget Busters – What Are They?

Today, we are going to discuss some common budget busters.

You know, those sneaky expenses that seem to come out of nowhere.

Just when you think you’re finally going to be able to pay extra toward your credit card or contribute to your summer vacation fund. Suddenly, the car needs new tires or your son tells you he needs new cleats for baseball.

It seems like there is always something to throw your plan off course, right?

Common budget busters are those items that occur infrequently or perhaps only once or twice a year, such as insurance premiums, taxes, car repairs, home repairs, membership dues, and activity dues for the kids.

There will always be some expenses that are unpredictable, but with a little foresight, we can take a proactive approach to plan for the most common expenses to prevent them from busting your budget.

Here’s What To Do About Them

To help you through this process, I have created a free download for you. This is an Excel spreadsheet that you can use to help ensure that nothing is missed when planning your monthly budget.

I have included the budget busters that affect my family, but feel free to modify it to fit your situation and season of life. You can also use this to create annual budgets for items such as clothing and pet care that may occur on an “as needed” basis.

If you have already been tracking your spending then this will be an easier process for you, but even if you haven’t, going through this process will help to ensure that you create a practical budget.

Follow these steps to create a list of your potential budget busters:

1. 1. Start by reviewing Mint, Personal Capital, your bank statements, and/or your online banking account(s) to find payments that occur on a non-monthly basis. Go back through the last year’s transactions if you can.
   2. Add any expenses that occur on a non-monthly basis that are not listed in column B under the appropriate category in Column A. Add any additional rows or categories as needed.
   3. Enter the payment frequency of each item in column C and the due dates in column D. Be as specific as you can with the payment due dates. You will reference these when we get to creating your monthly budget. For items like clothing and gifts, I entered “as needed” in column C and left the due dates blank.
   4. In column E, enter the payment amounts, and in column F, enter the annual payment amount. For example, if your car insurance premium is $300 every 6 months, then enter $300 in column E and $600 in column F.

Once you enter the annual amount in column F, the spreadsheet will automatically calculate a monthly amount for you in column G. This is helpful if you want to save up for each item by including it in your monthly budget.

1. 1. For items that don’t have a strict payment amount, such as household items, clothing, and vacation fund, consider how much you spent in these categories in the past year. Use these amounts to come up with a realistic projection for the rest of the year based on your past spending. Then decide if you want to increase or decrease this amount based on your financial goals for the year.
   2. Enter any appropriate notes in column H. This is where we note if we are going to pay for the item as it occurs throughout the year or if we are going to save ahead for that item by using the envelope system. (I will dive into the envelope system in a future post.) Feel free to add any information here that you think will be helpful.

Once you have a list of all your potential budget busters, you can feel confident that you have the information you need to create a realistic monthly budget that will help you achieve your financial goals.

Sure, there will still be expenses that you don’t expect, but with this data in hand, there will be far fewer surprises to throw you off course.

Next week, we’ll discuss one of our biggest budget busters in greater detail. I will take you through the simple process I developed to make sure that it doesn’t blow our monthly budget.

What About You?

Participate in the conversation. What are your biggest budget busters? How do you make sure they don’t throw your financial plan off track? Share in the comments below.

Disclosure of Material Connection: Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”