Not being honest to yourself, and other budgeting mistakes you are probably going to make when it comes to your variable expenses.

Today I wanted to touch on the subject of variable expenses in the longterm. Notice that I’ve added ‘ longterm’ there. Everything you take on in life, especially finances should be like planning and running a marathon, not a sprint. Sprinting is only for when a fire breaks out, or another of the other many crisises that can occur in life. That being said : if you don’t have a thousand euro’s ( don’t mistake this for an emergency fund though) in savings, you’re in a crisis. In all other situations, you should be training for the friggin’ marathon.

A set up for disaster, is not having a plan for your VARIABLE spending.

We all need various things, the key to budgeting is to see exactly what it is that you need in order to be happy, wealthy and fulfilled in your life. The fixed expenses are easy! There are just a few categories you have to consider, and as the term says itself, it’s all friggin’ fixed. You know exactly what goes out of your checking account each month.

But, when I asked some of my friends for instance, how much procent of their budget actually goes to food or clothing, they couldn’t really answer the question.

This has also been the case for 90 pct of the families I’ve coached over the years.

They “sort of “knew. But nobody seemed to know exactly. Sorry ain’t gonna cut it. You should know exactly, if you want to take budgeting seriously. You know what I’m sayin’??!!! Right! ( I like to insert Will Smith impersonations, lol).

Here’s a list of what you can spend on different categories of variable spending to give you an idea.

On a side note, money is a very wonderful and personal thing. It is for everyone to decide how and how much they want to spend on these categories. I know a lot, but I’m not the Messiah, lol. These are just a few guidelines…

  • Food should be about 10 pct of your monthly income when taxes are deducted. Take into account that things may shift a bit whether you’re a family or a single person. As a family of course you would have to combine the income of yourself and your spouse. I don’t know about you, but I was pretty shocked by that number when I first looked it up so I could use it as a recommendation for my clients. 10 pct is really not that much for such a fundamental need. For instance if you would take home 1800 euro’s each month, this means that you could only spend 180 euro’s on food. Which brings this to 45 euro -ish a week. Puh, easily spent. Thus, I feel like 15 pct is a better guideline. Keeping a good food budget requires a lot effort ( making lists- food prep- pantry organisation, so you have a very quick view on what’s missing, freezing and storing food, to name a few ) and insight. I believe that people spend way more than they think on food, just because it’s such a basic need, but also because the whole thing of keeping track of your and your family’s spending is a really time consuming thing.
  • Clothing should be about only 5 pct a month of your take home income. Luckily most people don’t need or buy clothes every month. I personally use the seasonal system. Which gives me a bigger budget at the time I decide to spend. Of course for families with growing kids, this system can’t always be implemented as they grow fast. There are many ways to be frugal while buying kids clothes, but that’s a whole different topic. For now, lett us just say, if you have growing kids, you might be the exception to this rule. And for those who like to buy designer bags. Now you really know how much your take home pay should be if you want to keep buying them. Hate to break it to you, but if you’re not a millionaire, it’s not really in your budget. Buy the vintage option.
  • Transportation should also only be 10 pct to 15 pct of your take home pay. This insight suddenly makes it far more easier to know if a downpayment for a car is in your budget or that you should really be taking public transport.
  • Then there is the FUN category. And this is actually where people make the most mistakes. The mistake being that they don’t further divide this category into smaller categories like hobbies, personal care and beauty, travel, special events like birthdays -Christmas, Valentines day, Easter, monthly brunches with their partner…. Luckily this whole group may consume about 30 pct of your monthly income. But it leaves you with a pretty small number once you’ve divided the 30 pct over all the categories that you want to spend on in order to lead a happy and fulfilled life.

These categories all calculated leave us with a percentage of 65 if we were being generous. Which only leaves 35 pct for our fixed expenses.

What people mostly get wrong, is that their lifestyle is about having a big house and a nice car. But actually lifestyle is about having more room in the variable expenses section to enjoy your life. Because in the end, that’s what’s matters.

When your budget shows that 50 pct of your income goes towards your fixed expenses like your house, utilities and car. -I know car is in the variable expenses but I feel like this is a tricky one, because a lot of people just ignore the fact, that when they actually can’t get a new car or lease a car looking at their budget, they get one anyway. That’s because not owning even the smallest car does deprive you from your freedom and the feeling that you can go anywhere at anytime, and a lot of people just aren’t willing to make that sacrifice. –

I can name a few occasions I counselled families that couldn’t get a new car. They took out a loan anyway for their kid that got his or her’s first job, didn’t get the premium insurance because they had already overspend and the kid had an accident with the car being total loss. Now, they’re paying for a car they don’t own anymore. And keep having to pay for something you don’t own anymore, is a very painful thing to do. So, if you decide get a brand new car together with a very expensive car loan, please also get the equally expensive insurance while you’re paying it off.

I’m not an advocate of buying second hand cars, because life is like a box of chocolates, so you better get the good ones, and not the ones that are expired and get you sick with a huge hospital bill after you’ve eaten them. If you know what I mean. Right!!! ( insert Will Smith again…)

Another big mistake besides the planning part of your variable expenses is not adding a cushion in your variable monthly expenses too. This is really a big one that people tend to forget.

Create a miscellaneous ( love that word!) category: this is not money you can spend on whatever you like. It is designed to help with unplanned spending. Like I said, life is tricky, and so can planning for the coming month be.

Various things can pop up, not only the good, the bad and the ugly. Let us be positive and start with good news, like an extra dinner with your family you didn’t plan in your budget. Or a little bitty uglier, a trip to the vet with your pet that is no where planned because you’ve forgot that you also need a budget for your pet’s expenses. Or the bad: the washing machine breaking down. This prevents getting your planned monthly budget off track or having to dig in to the emergency fund that you might still be completing.

The crucial thing to making money work, is that you need to be completely honest with yourself and your partner about it. People need a lot more than what they think they need. And my experience with budgeting is that it can also reveal nasty habits and emotions that you weren’t even aware of or willing to face.

Another mistake is not planning for your extra’s on a monthly basis. (Insert 3 Mexican cartoon figures singing “Aiaiaiaia” on ukelele)

Categorise Christmas, New-year, Easter, Halloween, Valentines day, your birthday, your friends birthdays, the parties you’ve planned for your kids, or all the other stuff that is important to you, in the extra’s category.

These are yearly reoccurring events that you need to save up for rather than taking this money out on the go.

My tip is to plan the events with the lowest budget you can ever imagine and work your way up from there.

This is actually a tip that can be implied in all categories. Start like a basic bitch and work your way up like a queen. ( Insert Ru Paul)

This post about variable spending is by far complete of course. If you are planning your money. I would like to know your thoughts, and how you make things work longterm without getting discouraged.

Peace out ( insert any rapper ),

Maureen

Published by Catharina

Lover of all things natural

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