Hi Reader!

Over the past few weeks we’ve tackled some of the most common budgeting challenges. We’ve looked at tracking that fits your life, building buffers to protect against unpredictability, and how naming it makes it easier to grow your savings. This week we’re covering the last (and sneakiest) piece: timing.

Expenses are not all the same, and understanding what timing type each expense is can give you the right plan to deal with it. Let's look at each one:

Type 1: Monthly Fixed Bills

These are your typical bills: rent, loan payments, streaming services, basically anything with a due date. Predictable and recurring, often these are the first things people think about when they start building a budget.

List every fixed bill and its due date. Create a dedicated bills account and set aside enough at each payday to cover what’s coming up. From there, work on building a buffer like we talked about in the previous newsletter. Build up a buffer of one week of bills, then two, then three, then a whole month.

Type 2: Discretionary Monthly Spending

Your daily spending money: gas, groceries, the random amazon purchase. This is often hardest to keep track of because it can vary week to week and month to month and it tends to quietly swallow whatever is left after the bills are paid.

So set a weekly or monthly allowance and move it into a separate spending account. You don’t need to track each individual expense, just how much left you have in your account. When it’s gone, it’s gone. But because the allowance transfer happens on a regular schedule, it becomes a fixed line item in your bills account, making your flexible spending predictable too.

Type 3: Unpredictable, Seasonal Expenses

Large expenses that don’t happen often or are hard to predict: the car repair, summer camp, holiday spending. They don’t happen every month, which means they’re easy to forget, but when they happen they can derail your whole month’s plan.

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So we want to plan for them - make them predictable. Start a list of every irregular expense you can think of, and add to it throughout the year as new ones come up. Estimate each yearly expense and divide by 12. Set that much aside each month into a named savings account. This is exactly the naming strategy we covered before. Each account has a purpose, so you always know what the money is for and when it’s okay to spend it.

Three types of expenses. Three different strategies. One budget that can actually handle your real life.

If these past few weeks have shifted how you think about budgeting, even a little, that’s the goal. You don’t need a perfect system. You need one that works for you, bends when life does, and gets easier with practice.

Want help putting all of these pieces together into a system that fits your life? Schedule a FREE Penny for Your Thoughts Q&A Call​

Remember, small change adds up. Step by step and penny by penny, we’re building a better life. Have a shiny day!

Laura

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