Budget Giving You Trouble? Look Below the Surface

If budgeting were easy, you wouldn’t be reading this. It’s not easy. You may already know not to overspend, and you understand income minus spending equals savings. That’s not the problem for many people who struggle with budgeting. The hard part is accidental under-planning.

If you’ve ever made up a spending plan that only worked for a month or two, you have probably experienced the effects of under planning. The typical budget format includes monthly expenses like housing, bills, transportation, and food. You also include non-monthly spending like clothing, vacations, and car maintenance. If everything on your spending plan adds up to your income but you didn’t actually plan for everything, you will overspend.

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Dealing With A Financial Emergency In Stages

Last week, Shannon wrote about what emergency funds are really intended for. As a follow up, I’m sharing a piece I wrote last summer that first appeared at NerdWallet.

Financial emergencies come in all shapes and sizes. They are, by definition, obligations that you haven’t planned for and that will be difficult to pay. Whether you should have anticipated an expense is irrelevant once you’re faced with it. If you must pay it soon, and if not paying it will bring serious consequences, then you have a financial emergency.

Many people have an emergency fund — money set aside for no other purpose than to bail them out of a crisis when they have no other cash available. Even if you don’t have such a fund, there may still be ways for you to make room in your budget to accommodate the urgent expense. And if you do have an emergency fund, you can use those same methods to put off having to dip into it, which will make your “rainy day” money last longer — or preserve it for the next unforeseen expense.

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