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Hey everyone!

Firstly, make sure you watch our video below to let us help you understand what we mean when we say a budget can change your financial world, regardless of where you are in life.

After that, don’t go away. Abigail took her time this week to bring five practical bits of financial planning advice you can put in to practice today. Trust us when we say, you probably haven’t considered a few. Or have you? Let us know how many you are already doing in the comments section below and feel free to include a few helpful tips of your own!

Beware the Budget Buster!

Nothing derails a person’s best efforts at budgeting more than the common budget buster. Budget busters are expenses that do not occur monthly, so we don’t include a line item for them in our monthly budget. They are pricey and irregular expenses, but expenses we should plan for and budget for nonetheless. Here is a list of common budget busters and tips to plan for them so you are not knocked off of the path to financial success!

Automobile expenses

None of us think about that oil change until it is long overdue, then we walk away with an unplanned $100 bill (or worse). To avoid unexpected car expenses, review your maintenance history closely and divide your annual auto service bills into a monthly budget line item, and then sweep that amount away into a savings account until you need it. For example, have you planned ahead for your next set of tires or brakes? That is easily a $1000 bill! Estimate the costs for those mandatory automobile maintenance items and divide them up over the year (or sooner, if your car is a few years old and will most likely need big ticket repairs/replacements in the near future). Forget the expensive, extended warranty. Just make sure you budget for your auto insurance deductible and routine repairs so that when these costs arise, you are prepared and not derailed.

Dental bills

There is really nothing I dread more than going to the dentist office. Actually, my dentist is super nice and keeps my teeth healthy, but I still fear the visit. Besides increasing my anxiety, a trip to see the dentist can increase your spending limit for the month. Regularly going to the dentist is a beneficial and necessary healthcare cost that we need to plan for. However, even the best dental insurance plans do not cover everything and are not always worth their premiums. Make sure there is a line item in your monthly budget for your annual dental cleaning. Call ahead to get the costs and include that item in your budget monthly. Sweep it into a savings account until you need it. Plan ahead for additional services, like dental x rays and, if you are prone to cavities, plan for those too. If you don’t have dental insurance, visit 1dental.com and check out their plans. It is not insurance, but a dental savings plan. Compare
and see if you should even be paying insurance premiums or if this is a better deal for your particular dental needs.

Home Repairs

Make sure that you create a “sinking” fund for unexpected home repairs. The average major home repair sinking fund should be about 3% of your home’s value. If you do not already have a robust emergency fund in place, calculate what your sinking fund should be, divide by 12, and create a line item in your budget. Then sweep that money away every month in a designated account that you will not touch until you need it for home repairs. When you realize what replacing a hot water heater or air conditioner costs, it is easy to see how these home repairs can derail your financial plan for several months. You may even consider having your homeowners insurance deductible set aside in case of a catastrophic weather event like we see in Florida every few years.

Medical expenses

As a mother of 4 children, I am a major user of our health insurance plan. When our children were little, we frequently met our medical deductible by March every year, sometimes even sooner! I am a huge proponent of the high deductible health plan and an HSA account. If your employer offers this benefit, make sure you take full advantage. If not, put a line item in your budget for medical expenses and try to save the amount of your health insurance deductible in a savings account each year. That way, you will be prepared in the case of a surprise broken bone or emergency appendectomy! If you know a surgery is forthcoming, plan ahead by saving for your anticipated out-of-pocket expenses and contact your medical insurer to request a payment plan. These plans are usually interest-free and have long-term payment options available.

Income taxes

Nothing will derail your best efforts to save like a huge income tax bill you didn’t prepare for. If you frequently owe a big tax bill at the end of the year, make sure you are ready for it next year. Meet with your CPA and do your best to calculate what you will owe and plan for it, either by making estimated payments or putting that money aside in a savings account. It is easy to suffer financial setbacks by not planning on what you will owe the IRS. Never doubt that the taxman cometh! So be prepared and well-equipped to pay your dues.

So, please do your best to avoid these budget busters. You work too hard to be bamboozled by these easy-to- prepare-for, common household expenses. Remember, if you are ready, you won’t have to get ready, you will already BE READY! If you need some help with your budget…. Just ask us.

Best,

Abigail Skipper Financial Coach Ranch Capital Advisors

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