Budget killers. Even if you’ve never heard the term you’ve definitely felt their effects. From an A/C unit dying to a refrigerator on the fritz, these are big purchases that are often hard to swallow. They’re equally hard to budget for. The good news? There are methods you can use to help you face these budgetary challenges in stride without going into debt to do it.
Spending or not spending money is often a mental game. We either provide self approval to purchase something or self denial to draw the purse strings tighter. This is of course true, but the difference between success and failure goes deeper than that.
In order to be successful with the money you have, you need a strategy. Your strategy should not only incorporate spending less than what you bring in, it should also include methods to “cheat the system” in order to work to your advantage.
Let’s explore a couple of ways you can be smarter with your money to help save for the budget killers that will inevitably come your way:
Levelized Billing
With summertime upon us, our A/C usage is about to go way up. This obviously has a direct correlation to the amount we’ll owe on our electric bill. For the first few years of living in our house, I got used to the fact that our electric bill would increase by $100 or more in the summer months. The amount owed was a mystery until I received the bill, providing me with sticker shock for 3 months out of the year. Then I got smarter.
York Electric offers something called, “Levelized Billing.” This allows you to pay essentially the same amount each month (within a few dollars) based on your past 12 months of usage. This of course means you’ll spend a bit more during the winter months when you’re not using as much air conditioning, but the mental payoff is more than worth it.
Having the same bill amount each month allows you to effectively plan your budget. No more spikes in your bill, no more worrying about how much you’ll owe this month compared to last month.
You (hopefully) already have this in place with things like your cell phone, mortgage and insurance bills. This is just another way to know what to expect each month and remove any surprises.
Levelized Spending
I realized soon after signing up for levelized billing that I utilize the same concept when it comes to my spending. Regardless of what I’m buying, there is a spending threshold that I refuse to cross. From groceries to clothes, I have an idea of what I’ll spend on something before I walk through the doors of any store.
Having a plan is critical. Sure, it removes the fun of a spontaneous purchase but it also helps you avoid making budgetary mistakes you’ll regret months or years from now.
I’d love to eat a NY Strip every night of the week, but if the pork chops are on sale, it looks like I’m eating pork for a while. It’s a small concession to make but it could make a big difference on your bottom line and ultimately success vs. failure when it comes to your money.
Knowing what you’re going to spend each month allows you to save for those budget killers that will inevitably come your way. Being able to save $50 over time will give you either a head start or allow you to pay for something outright when the time comes. Small saving steps will be very advantageous to you in the long run.
A measured approach will turn budget killers into budget hiccups.
Hiccups are annoying but will go away quickly.
The alternative requires being raised from the dead.
That’s clear enough. Annoying it is.
