Question: We’ve been on a budget for several months now, but invariably we have a problem when an unexpected expense takes away money that we allocated elsewhere. How do we handle these unexpected expenses? Response: I’ve found that in reality, there are very few unexpected expenses but rather expenses that have not been properly planned for. If you look at your budget on an annual basis, you will find the same “unexpected” expenses reoccur: cars break down, clothing wears out, teeth have holes in them, children get hurt and need medical care, etc. A workable budget must plan for these variables. For example, if you spend $1200 a year on clothing for your family, then $100 a month must be set aside for clothes. In the months you don’t spend that money, it’s not a windfall! It’s an expense that didn’t come due that month; the surplus must be saved for future use. At the end of the month, transfer budgeted but unspent money into a savings account. In any given month there may be unused money in a budget category. If you spend it on other things, your budget will never work. Budgeting is a process of sacrificing short-term spending to accomplish long-term goals. (www.christianfinancialministries.org)
Category Archives: Budgeting
Variable Income Budget?
Question: I’m having a hard time finding a full-time job to support my family. So I’m working part time in sales and anything else I can find. As a result my income fluctuates from month to month. In fact, some months I receive practically no income at all. Can a budget help me? Response: Everyone needs a budget which is simply a tool to help you learn to live on less that you make. Families with variable incomes need budgets just as much if not more than families on fixed salaries. Many families with low variable incomes often get trapped into debt because they borrow (credit card) during the lean months and spend what they make during higher income months rather than repay what they borrowed. I might add that families with higher variable incomes (construction and seasonal workers, etc.) often suffer in the same way. To properly budget a variable income, you must determine what your average annual income is, divide that by twelve, and then develop your budget around that amount. You should put all your income into a savings account and draw your average monthly salary from that, thus averaging out the months of high and low income. I would also point you back to the principle found in Proverbs 27:12: “The prudent see danger and take refuge but the simple keep going and pay the penalty.”