Do you guys ever get hit with those expenses that are so unexpected they just make you laugh? Haha! I’m talking about those unexpected doctors visits or needing cold medicine when your kid gets sick. Or even when your utility bill comes out way higher than expected. These unexpected expenses were hurting my budget month after month, and to be honest I was sick of it. I thought that getting on top of my budget and planning everything out would help slow these unexpected expenses. But it didn’t! That’s when we decided to add a First Aid Kit for our budget and you should too.
The Grey Area
This is that grey area within personal finance where there isn’t a clear way on how to handle these unexpected expenses. Even if you add a miscellaneous category to your budget, your realistically spending this money on such random things. Leaving you with no money in your miscellaneous budget when you actually need it. And to top it off, the worst advice I’ve heard was to just find the money in your budget. Well, what do you do when you’re on a zero-based budget or live paycheck to paycheck? Going into credit card debt or pulling from your savings is usually the next option to answer this tuff question.
My Unexpected Labs
Like you guys, I’m not trying to go into debt or pull from my savings for these unexpected moments. To be honest, I couldn’t predict, plan or budget for these kinds of things even on my best day. Even when I had a scheduled doctors appointment that I saved for months in advance. I still got hit with some unexpected labs after that visit. That ended up costing me an additional $60 outside of my healthcare budget. Now I got stuck with swiping my credit card since I didn’t have enough money in my checking account. These are the kinds of expenses that start to stack up on the credit card. And then we wonder how we got into so much credit card debt a few months later. This is what I’m trying to avoid and was still getting stuck with.
I don’t know about you guys, but this made me very unhappy and unmotivated when going over my finances. Instead, I want to feel confident about my finances even if these moments come up or not. I can only imagine how unmotivating and difficult it must feel for those just starting their financial journey. All I can say is the lesson here isn’t another failed budget. We need a budget makeover on how we handle these kinds of expenses. Because if you’re like me you want to feel and be confident about your money, especially when these moments pop up.
What is the First Aid Kit?
So after my labs, I sat down and talked to my husband. I’m telling you guys I was so DONE with these unexpected expenses killing our budget month after month. At this point, we decided to come up with a First Aid Kit for our budget. This is simply a $100 buffer for any of those unexpected expenses that popped up during the month.
This allowed us to have money for those expenses without:
- Going into credit card debt
- Pulling from our emergency fund or
- Having to cut other expenses in our budget.
Cost of Living
The best part about adding the First Aid Kit to your budget is that you only have to replenish what you use. Meaning you don’t have to increase our cost of living each month like we would with your miscellaneous budget category. This is so helpful because we all know these unexpected expenses pop up out of nowhere. And if they don’t come up then you can just roll that money towards next month. That way you know you have the money available when we need it. Plus position yourself to keep our cost of living as low as possible.
For example, my First Aid Kit of $100 came in handy when my unexpected labs cost me $60. That left only $40 in my First Aid Kit. Meaning that next month I just had to replenish my buffer with $60. This is much easier to handle because if I use my credit card I can pay it in full.
We’ve also used our First Aid Kit for non-medical uses as well. I remember using it when we miss quoted our utility bill during those seasonal transitions. We expected our utility bill to be higher, but it came out way higher than what we projected. The bill still had to paid and it was nice that we could pull from our First Aid Kit when money was tight. Moving forward we started saving more money for those transitional seasons so we wouldn’t need to pull from our buffer.
I also remember using our buffer for unexpected giving. One time my grandmother needed a medical device that her insurance didn’t cover. If felt so good to be able to quickly send her our First Aid Kit. I also think it’s important to save this money in a place that’s easy to access. Just in case you need to use it quickly. This moment made it clear, that having this money in our bills checking account was the best fit for us. If your using cash envelopes, then a First Aid Kit envelope would be a good option for you.
Use with Discretion
Sending my First Aid Kit to my grandmother was a personal choice we took to help her. This buffer can be used at your discretion. Just keep in mind that it’s mostly for unexpected needs that are time sensitive. This isn’t an invitation to overspend or not budget. I know how easy it is to overspend on miscellaneous or go out to eat and use this buffer. But that’s not the purpose of this First Aid Kit. Think of it as a bandaid for your budget.
I hope this blog post helps a lot of you who are struggling with those unexpected expenses killing your budget. Since becoming a mom, those expenses haven’t stopped not one bit. But having this $100 buffer that is replenished only when used will help you a tone when budgeting. If you have any questions please let me know in the comments. I will also be doing short videos answering all of your most common questions on my social media. Instagram @PoisedFinanceLifestyle and FaceBook @Poised Finance + Lifestyle.