This post is part of a series called “The margin”.  If you missed the introduction, you can go back and read it here.  In this part of the series, I’m talking about building in a financial margin when you consider your budget for expenses.  This is the fifth installment on the financial margin.  If you missed the first four you can read them here, here, here, and here. 

Part V: Childcare, pets & living it up

Childcare

If you get sick, have to work late or travel for your job, you may need to increase the amount of help you get with childcare.  If that help is paid, it’s going to cost extra.  Add a margin for childcare on top of what you budget for your regular coverage needs to prepare for overages like these.  (If only we could expense them!)

Pets

As I said in the intro post, unless your pet dies young, it’s probably going to cost more than you anticipate.  Consider the cost of occasional pet sitters for when you’re away, vet bills when Sparky’s ill, and special care and food when he’s old (or ill).  Then build a margin on top of your regular budget for food, annual vet visits, toys, treats, pedicures, and outfits (if you’re one of those people).

Living it up

In the midst of all this talk of doom and gloom, it may seem odd to suggest building in a margin for living it up.  However, during a week when your dishwasher breaks and your car gets dinged in the parking lot, you’re really gonna want to be able to say yes when a friend invites you for a spontaneous night out.  Things come up.  Even good things. Continue reading Things I’ve learned so far: The financial margin, Part V – Childcare, pets & living it up →

This post is part of a series called “The margin”.  If you missed the introduction, you can go back and read it here.  In this part of the series, I’m talking about building in a financial margin when you consider your budget for expenses.  This is the fourth installment on the financial margin.  If you missed the first three you can read them here, here, and here. 

Part IV: Medical expenses

This is another big (and unpleasant) one.  If you don’t have health insurance, look into getting it.  With the Affordable Care Act it is more accessible than ever.  Get acquainted with the options (and potential subsidies) available you at www.healthcare.gov.  There is information on calculating the cost of insurance, determining eligibility for public insurance and subsidies, and applying for insurance through the Health Insurance Marketplace.  Enrollment began October 1st and if you enroll by December 15th you can be covered as early as January 1, 2014.

Even if you do have insurance, illness, injury or pregnancy and childbirth can drive up your spending on medical care.  If you’re subject to a deductible, it’s a really good idea to open a Health Savings Account (HSA) to set aside pre-tax dollars to cover the expenses you incur before the deductible is reached. Continue reading Things I’ve learned so far: The financial margin, Part IV – Medical expenses →

This post is part of a series called “The margin”.  If you missed the introduction, you can go back and read it here.  In this part of the series, I’m talking about building in a financial margin when you consider your budget for expenses.  This is the third installment on the financial margin.  If you missed the first two you can read them here and here. 

Part III: Automobile-related expenses

Let’s be honest.  Car ownership rarely costs less than we expect.  Consider the following ways in which you might incur overages in this area of your budget.

1. Auto maintenance, repair and insurance

It’s very hard to estimate how much money your car will need to keep running.  I think that’s part of the reason maintenance plans are such popular up-sells with new car sales.  Repair bills are one thing, but never knowing when they’re coming or how bad they’re going to be really makes them sting.  There are some rules of thumb about this. Continue reading Things I’ve learned so far: The financial margin, Part III – Auto expenses →

This post is part of a series called “The margin”.  If you missed the introduction, you can go back and read it here.  In this part of the series, I will talk about building in a financial margin when you consider your budget for expenses.  This is the second installment on the financial margin.  If you missed the first one you can read it here. 

A clarification before we begin again
After talking with a friend about yesterday’s installment, I realized my advice about the margin could be taken as a cavalier suggestion to simply spend more.  That would constitute irresponsible and insensitive advice, especially when so many of us are doing the best we can with limited resources.  Let me clarify, please, before continuing.

When I urge you to consider building a margin into your budget, please note, Dear Reader, I’m not suggesting that you budget or spend more than you can afford on the items discussed in this series.  I’m merely asking you to think about the costs you can’t fully anticipate, and factor those in by adding a margin for error.

When you get real about the repairs your car could need, vet bills your pet could incur, the appliance that could blow at any minute, etc… you may find that there’s not as much room in your budget for the other things you’d like to spend some money on but don’t really need to.  I would argue that that’s okay.  If costs are going to come up that you will need to pay for regardless of whether you or not you want to, then better to cut back on cable service now and be ready to pay the mechanic, if that’s what it will take.  Capice? Okay, let’s roll. 

Part II: Food and clothing

1. Food

As a nation, Americans spend far less on food than people in other countries and less than prior generations of Americans (thanks in part to heavy agricultural subsidies that make much of the food supply relatively cheap).  However, expenditures on food still make up 11% of our take-home income, on average, and a lot more if you’re poor.  Furthermore, it’s an area in the budget where we can exercise more discretion.  The choice of exactly what and how much to buy is entirely in our hands.  And then there’s the whole needing-it-to-survive thing.  So for many reasons, food prices matter a great deal to a lot of people. Continue reading Things I’ve learned so far: The financial margin, Part II – Food & clothing →

As a (still relatively new) mother undergoing some major life changes, I’ve started recognizing a lot of things about life that had never occurred to me before. They are not earth-shattering discoveries, but they are my major breakthroughs. In this space, I will share with you some of what I’ve learned so far. I hope the thoughts I’ve gathered will inspire you to reflect on what you’ve learned about life (or at least laugh at how long it took me to figure these things out).

The financial margin

This post is part of a series called “The margin”.  If you missed the introduction, you can go back and read it here.  In this part of the series, I will talk about building in a financial margin when you consider your budget for expenses.

Some items in a household budget are relatively stable.  Think mortgage payments (with some tragic exceptions), car payments, gym membership, internet service, landline phones (does anyone still have one of those?), and household supplies like light bulbs and toilet paper.  But many are not stable.  There are the obvious ones (heating/cooling, car repair, home maintenance) and then there are some sneaky ones like gas, groceries, medical bills and more.

To prepare yourself for unpredictable expenses, I suggest building a margin into your household budget.  That is, tally up what you can reasonably expect your costs to be, and then add some more.  How much more?  That depends on your situation.  Read about how each of the budget items can vary, adding non-trivial amounts to your total household expenditures, and then determine how big your margin should be.  Continue reading Things I’ve learned so far: The financial margin, Part I – Housing →