Creating a spending plan is a smart way to give your money direction. The choices you make about where and when to spend your money affect nearly every aspect of your life. Fortunately, basic money management is a skill that’s easy to learn and will allow you to stick to a budget. 


Your budget is simply a map. It tells your money where to go, so it can work for you when it gets there. There are two main types of expenses that you’ll prioritize inside a budget. Recurring costs are expected, easy to plan for, and happen at regular intervals. Non-recurring costs are unexpected events, emergencies, and things you pay for on an as-needed basis.

Putting recurring expenses into your budget is easy. Simply look back at your bank account history and make a list of bills you pay, when you pay them, and their amount. Here are some examples of recurring expenses:

  • Rent/Mortgage Payment
  • Insurance Premiums
  • Utilities like electricity, natural gas, water, trash, sewer, phone, the Internet, etc.
  • Gasoline
  • Groceries
  • Debt payments like credit cards, personal loans, car loans, student loans, and store accounts

Non-recurring expenses are more challenging to plan, but with a bit of thought, fit into a budget nicely. Here are some examples of non-recurring expenses:

  • Dental work
  • Car repairs
  • Christmas shopping
  • Back to school shopping
  • Travel
  • Home repairs

Saving for non-recurring expenses

An emergency fund offers a low-stress way to cover unexpected expenses that are time sensitive. Crucial car repairs, appliance replacement, emergency travel, and dental work often can’t be delayed.

Occasional expenses like new tires or seasonal clothing that are expected, but aren’t part of a monthly budget can be broken up into small chunks and put into a savings account. Even if you can only set aside a few dollars out of each paycheck, it will help to take the edge off larger unavoidable expenses.

For example, if you know your kids will need clothing, shoes, and school supplies in August and you’ll have to spend about $250, it’s best to plan for that beginning in June. Setting aside $25 from weekly paycheck during the summer months will set you up to be able to afford back to school expenses.

Building a safety net

It’s crucial to save money every time you get paid to create a financial safety net. This money will help you meet your financial obligations if something happens that prevents you from being able to earn a paycheck.

While it isn’t a long-term solution to job loss, serious illness, or being displaced by events beyond your control, having three months’ worth of expenses covered will allow you to make decisions about your future from a place of peace instead of a place of panic.

Making this a financial priority saves grief in the long run, so if you can afford it, give yourself 10% of everything you earn to build your safety net. If possible keep the money someplace that isn’t connected to your checking account to remove the temptation to tap into it on a whim. You’ll need to have quick access to the money, so a simple no-fee bank account works well.

Budgeting successfully and taking control of your finances requires practice. If your first few attempts aren’t perfect, that’s OK. It may take a bit of time to get it exactly right, but when it comes to financial management, the effort pays off. And if you need help, it's always a good idea to speak with a qualified lender.

Learning to manage a budget becomes a fairly simple task with a bit of practice. Take a look at The Basics of Budgeting to get started.

September 22, 2017
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