You may agree the miscellaneous budget category can be one of the most challenging categories to manage and can turn your budget upside down if not carefully managed. I’ve wrestled with it in the past, trying to get these expenses under control, and it’s sometimes still a challenge even if you’re not trying to create a budget for the first time.
What Is The Miscellaneous Budget Category?
Why is it so challenging? Well, let’s first start with a definition of the miscellaneous budget category. It’s the budget category that captures all expenses that cannot be assigned to common budget categories such as Food, Clothing, Entertainment, etc. It’s sort of the catch all budget category and can include monthly, periodic or yearly expenses. Examples of miscellaneous expenses in my budget include birthdays, other gifts, Christmas gifts and decorations, household, toiletry, diapers/baby supplies, dry cleaning, magazine subscriptions and many more.
Why Are Miscellaneous Expenses So Challenging To Manage?
People often forget about miscellaneous spending or fail to communicate about it. Even though my wife and I have regular conversations about money, we often find we have a new miscellaneous expenses occur in the middle of the month which weren’t planned. It’s also hard to identify all the expenses that should be associated to this category. Each year might present new expenses and it’s easy to forget about them. Many people don’t plan enough in this area of spending which often can lead to the use of credit card to meet their needs.
So, how do you manage miscellaneous spending? While I’ve wrestled with this budget category, I’ve come to learn a number of tips that can help you avoid surprises.
Plan For Miscellaneous Spending
Try brainstorming such expenses at the beginning of the year to make sure they’re included in your budget. At the same time, review them each month to include additional expenses that may be new. If you have a major change in your life such as a child birth, you can bet new miscellaneous expenses will be lurking near by.
Build A Savings Buffer
Try to build up a buffer of one year in advance to meet these expenses. Certainly, this is challenging and is easier said than done. For those expenses that occur periodically, or once a year, you may find them easier to manage with some cushion in your budget. How do you do this? Well, it takes time, but try to save more for them than what is required. For example, if your Family Birthday budget category is $200 per year, try to save $225.
Make Big Expenses Small
You can further plan this spending by identifying expenses that occur monthly and the ones that occur yearly. For the yearly expenses, add them up and divide by 12 to get to a monthly amount to budget. This makes those big expenses smaller and easier to manage. You can then turn them into monthly expenses you start saving for now.
Use Software
Use software to keep track of miscellaneous expenses. There is a lot of free money management software available on the internet, such as Mint.com, that can help you monitor these expenses, add them to an online budget and track spending to them. While many people keep their budgets at a high level, I like leveraging software to help me track more detail around these expenses so I can eliminate the surprises.
The Great Big List Of 75 Budgeting Tools & Finance Software
Reduce Spending
Finally, consider the positive side of miscellaneous expenses. Many times these expenses aren’t always the most critical in your budget. If you’re tracking them closely you can review them to determine where you can make spending cuts. Not being aware of these expenses means you’ll just keep spending for them.
How do you manage your miscellaneous expenses?
As long as the miscellaneous items are not too big and not too frequent, we find that a savings buffer takes care of these.
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I agree with your method, and I have a tab in my budget spreadsheet devoted to these “extra-ordinary expenses”. It changes each year, but it’s a good indicator of what to expect. I total it up and divide by 12 to come up with a number to save each month on average.