When Little Things Add Up

Most people account for the basics in their budget—food, shelter, and transportation. But many categories go unaccounted for – and we still spend money on them regularly. To help prevent credit card debt, here are a few areas you may want to start allotting money for in your monthly budget.

Gifts. Birthdays, weddings, showers – they are all reasons to celebrate and require some of your hard-earned dollars. These gift-giving occasions can seem unpredictable, but you can prepare in advance by including them in your budget. How much do you usually spend—do you even know? If not, visit past bank or credit card statements to find out, then average the numbers to find a reasonable amount to sock away.

Hospitality. Your relatives are visiting from out of town and you need to entertain and feed them. Or, you’re the one traveling and you wind up taking your extended family to dinner. These unpredicted expenses can add up over time. You may want to build a “hospitality” section into your budget.

Non-food items. Do you know what you spend every month on toiletries (toilet paper, shampoo, detergent, etc.)? Most people budget for food but fail to account for the other essentials – and the cost of these items has risen steadily over the years. If you don’t keep track of what you’re spending, the expenses will slowly chip away at your budget.

Child care. If you’re paying for day care, you know what you spend every month because you write a check for it. But what about unexpected child care expenses, such as babysitters for evenings out or unplanned snow days? You may want to build a small cushion into your budget every month to cover these expenses.

Do you have an emergency fund? In addition to budgeting for the little things, it’s also important to budget for life’s unexpected big expenses (like car or home repairs). To prevent credit card debt, build up your emergency fund to three to six months’ income.

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