Big Expenses, Small Budget: How To Make Ends Meet
Living frugally helps you afford the little day to day expenses and save for some bigger costs down the line. However, sometimes those expensive charges rear their heads a bit earlier than you would prefer, and you don’t quite have enough money in the bank to cover them. Don’t worry, there are plenty of ways you can make ends meet without breaking the bank, or denting the savings you have carefully put aside.
When your car unexpectedly breaks down, you’re left to rely on public transport or Uber to get around until it’s repaired. Unfortunately, you might hear the dreaded diagnosis that you car is past the point of fixing. You need to buy a new one. While you probably didn’t factor in having to fork over the funds for a new vehicle, this doesn’t have to be as expensive as you fear. Shop around for the best loan rates for used cars; this way, you get a new mode of transport, and you protect your hard-earned savings.
Adding a patio, deck, or extension to your home can increase its value, but the cost can get out of control if you don’t keep a close eye on things. Since the price of a renovation will fluctuate depending on what you want done and who you hire to do it, you need to have a plan in place to pay for your patio. Most homeowners can fund their home improvements with a home equity line of credit. This is a good option if you already have a good first mortgage. With these loans, you draw out money as you need it and pay it back at your own speed, as long as you make at least minimum monthly payments.
Unexpected expenses, such as emergency home repairs, can blow the biggest dent in your savings and leave you back to where you were before you began putting money aside. Even though you made emergency funds exactly for this purpose, it doesn’t hurt any less to see your finances go down the drain. However, you can take away some of the sting by having some money management plans in place.
Make a list of common seasonal expenses, like property taxes, car insurance, house/tenant insurance, Christmas gifts, birthday presents, car repairs, winterization, or vision and dental bills. Then look at your calendar for the past year, along with bank and credit card statements, to see what irregular expenses you paid for with credit. Once you have these variables, you can calculate how much extra money you can afford to set aside in a different account. Make the payments to this account automatic, ideally so you can forget the account exists while it grows. The next time you need to dip into your savings for a rainy day, you can be pleasantly surprised when you rediscover this emergency account and see how much you have saved.
Resist temptation to spend the money impulsively to let it grow even more.