Budgeting for the Small But Not So Standard Expenses (The Social Edition)

So you set up your monthly budget with all of your standard expenses and that's great! But as we all know life is a lot of things but standard; and your standard budget isn't always going to cut it especially when the ad hoc expenses,as I call them, come knocking at your door.

What’s an ad hoc expense? It’s an expense that is for a particular situation that does not occur every month. There are known ad hoc expenses such as birthdays, holidays, tax season, if you owe, that come around every year at the same time making them a little easier to plan for. But there are also those unknown ad hoc expenses such as weddings, baby showers, housewarmings, graduations and any other celebratory gatherings that don't happen every year but will certainly have you dipping into that wallet.

So how do you account for these expenses when your monthly budget is already set-up? And how can you make sure these expenses won’t send you further into debt? Well I have a few tips and tricks that  may make it easier when these situations arise.

*Note: Car repairs, house repairs, and unforeseen medical expenses are probably some of the biggest “Not So Standard Expenses” people will experience in their lives. These expenses are some of the reasons having an emergency savings is essential, therefore I

will cover these topics in a post on savings. However, an expense does not have to be grand to still have an effect on your finances. Therefore, this post will focus on those smaller non-standard expenses that can add up over time.

First, the Knowns…

Birthdays and especially holidays can be fun and joyous occasions but they can also cause stress and financial strain if you let them. I get it, when getting gifts for our loved ones we want to convey how much they mean to us and we are often taught, directly or indirectly, that this is done by showering them with expensive gifts. The more money you spend clearly equates to how much you love and care about them, right? Wrong! This is just an easy way to throw you off your game year after year making it harder for you to reach your financial goals. Your friends and family should already know how much they mean to you and you shouldn’t have to break the bank to prove it.

Nonetheless, I’ve seen countless birthdays and especially holidays where friends and family members spend large amounts of money on gifts only to complain in January that they are broke or are still paying off credit card bills for gifts long forgotten in someone’s closet or basement. To me this is madness but I understand that it is a mindset that a lot of us have embedded. And I also understand that until you change your mindset it’s hard to change your behavior but I am not a therapist so I am in no way trying to “fix” anyone but I am offering some tips to help lessen the financial burdens of these ad hoc expenses.

Create a Limit

My first tip is to always start with creating a limit for yourself. Be reasonable with your limit. This  amount of money should be what you are able and willing to spend on gifts and any festivities that go along with the event. Note that I said able AND willing. Just because you’re able to spend $1,000 on presents for the holidays or an event doesn’t mean you have to or even that you should. 

Shop Early if Possible

The one good thing about known adhoc expenses is that you know they are coming. This means that you do not have to wait until December to buy Christmas gifts or wait until the week or weekend before to buy someone a birthday gift. Shopping early helps alleviate the stress of last minute gift buying when you're likely to spend more money because you don’t have as much time to weigh your options or to shop around. 

Shopping early also allows you to spread out your gift buying, especially for the holidays, over multiple paychecks as opposed to one or two. The past few years, I started doing most of my Christmas shopping in early November. I found this afforded me about 4 to 5 paychecks to cover my holiday expenses and helped lessen any financial blow of trying to buy all of my gifts in December in addition to paying my normal financial expenses.

Start a Gift Savings

Starting a savings for certain events is also a good way to keep ad hoc expenses from completely ruining your budget. Assuming that there is money left over after your monthly expenses, and most likely there is even if it’s not a grand amount, taking a small portion of that and sitting it aside can really help you in the long run. Think about it, waiting until December and finding out your gift total is about $600 and trying to use 1 or 2 paychecks to cover it can be rough. But what if in January you started setting $50 aside each month; now it’s not that bad.

I would suggest, if using this method, to start a separate account or store the money in a safe place. (Note: I prefer using a high interest savings account, so your money is making money as it waits to be used.) This helps keep your priorities straight, separating your savings by your goals. I have several savings accounts each started with its own purpose but I will get into this in more detail in another post.

 

I know a lot of people use this method generally for the holidays but it can also be used when planning for vacations.If you are disciplined and stick with it, this method is great for helping you pay for those larger expenses.

...and about those Unknowns?

This set of expenses is a little tricker but can ultimately be managed as well. Although unknown expenses don’t happen on a routine basis, generally you will always have a little leeway time even if it's just a few weeks. Your friend just got a promotion and wants to go out and celebrate, your cousin just  moved and is hosting a housewarming, your  mentor is having a retirement party, your parents are celebrating a big anniversary. Yes, life happens; this is where having a gift savings comes in handy because you will already have a portion of money set aside meaning you won’t have to dip into your checking account to cover the expense.

You don’t know me, but you do know you...

You know your financial situation better than anyone else. You know how much you are able to afford and if at that time it’s not a lot. Guess what? That’s okay! Don’t go broke trying to prove to others that you aren’t. When it comes to gifts it’s the thought that counts. If your gift is thoughtful no one is going to worry about how much you spent, and if they do then quite frankly they’re really not the type of people you should want in your life.

Preparation, preparation, preparation

In conclusion, preparation key. Plan out how much you want and are able to spend and make preparations to determine  how you are going to finance it. Are you going to put away small amounts of money throughout the year? Are you able to finance your  gift spending  with a few paychecks? Again, you know your financial situation.But hopefully, these tips can help make preparing for ad hoc expenses a little easier.