It is always advisable to have a contingency fund which can be used to pay for unexpected expenses
Picture for representational purpose
Hyderabad: Planning the monthly budget and sticking to it is an essential part of a healthy financial planning. It is, however, important to estimate expenses on a realistic basis, based on historical trends, and try to stay within this budget.
However, many times it is seen that there is a deviation from the budget. Some unexpected expense comes up, which is not only unavoidable but also causes a huge change in your monthly expense. Here are the top six unavoidable expenses that can blow your budget planning.
Medical expenses:
This is the most likely unavoidable expense that can dent your budget planning. Medical expenses can either be for the purchase of medicines for regular illnesses or major expenses like a surgery.
It is advisable to set aside a reasonable amount for regular medicines on a monthly basis. If this amount remains unutilised during the month, it should be carried forward to the following month. Buy a health insurance policy to to meet hospitalisation expenses. However most insurance plans require you to be admitted in the hospital for at least 24 hours.
Weekend Outings and Socialising:
Try and go with a budget in mind when you step out with the family for a movie outing or to try out a new restaurant. At the restaurant do not order every course on the menu from the starter to the dessert. Try restricting yourself to only the main course or share a starter and dessert.
To avoid placing orders when hungry, eat a bit at home before leaving for the hotel. When entertaining friends, try having a pot luck dinner at home, where everyone brings a dish based on some planning.
This way it is much more fun rather than eating out or trying to do everything by yourself. The idea is to plan ahead and stick to a budget that does not burn a hole in your pocket.
Impulsive shopping:
Shopping always means spending money. When the shopping is impulsive, it hurts more. Impulsive shopping can result in people falling into a debt trap, if they don’t know where to stop.
Impulsive shoppers also generally do not recognise this as a major financial problem. If you think you are an impulse buyer, it is better to restrict your visits to the mall or shop with someone who is responsible.
One way of reducing expenses in this category is to leave your credit card behind when you are visiting malls. Paying by cash generally reduces the tendency to spend impulsively. Impulsive and unessential purchases are best curbed through diligent planning, conscious spending and understanding as to how money is spent from your account on a monthly basis.
When you notice a spending behaviour pattern that needs to be reformed, do so before it becomes too late.
Breakdown of gadgets and household appliances:
Almost everything we do today is related to technology. Electronics have become such an important part of our lives for many of us that we do not think twice before shelling out money to but new gadgets if the old ones develop problems.
Try not to be tempted to go for a brand new, enhanced versions of cellphones or gadgets. Try to insure high value items or have them repaired at an acceptable cost. Sometimes, however, it may make better financial sense overall to replace a gadget than to get it repaired. Use your discretion to decide when to go to the shop and when to head for the service centre.
Events involving family and friends:
If you have to attend a wedding, baby shower or any other occasion involving families or friends, it means you will have to spend on travel, accommodation, gifts and a whole host of other expenses.
This category of expense may not be unexpected, as such occasions are scheduled well in advance. However, these expenses are unavoidable for most of us. If you have a surplus in your monthly cash flows, it may make sense to put aside a small amount every month for this purpose and use it only when such occasions arise.
( Source : dc )
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