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Originally posted by scfr
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Aha! This might be why there is a communication gap between you and some of the members on this board.
You see ... "Car" is indeed a budget/expense item. It does not matter whether you have saved money for it or whether you pay for it with your credit card, ANY money spent on your car for oil changes, new tires, repairs, etc. is a car expense and it needs to be budgeted for.
Just for example, let's say you have kept track of all the money you spent on your car except for insurance and gas (your car expenses) for 3 years and when you add it all up you see that you spent:
- $250 for new tires
- $15 for new wiper blades
- $180 for 9 oil changes (3 per year)
- $250 for repairs
- $18 for 18 times (every 2 months) vaccuming it out at $1 a pop
- $2 for car washing soap
- $90 for the annual registrations ($30 per year)
- $60 for state inspections ($20 per year)
When you add it up, you'd see that you spent $815 over 3 years. That means your monthly car expenses were $24. (Please note that I included even the small stuff like soap and vacuuming ... It all adds up, truly.)
When you make your budget, which is you deciding in advance how you are going to allocate your income, you would look at what you spent in the past and estimate what you will be spending in the future. Let's say your car is getting older, and you know you're going to be facing higher repair bills. You might decide $24 per month isn't going to cut it so you budget $30 per month. Then, you might decide that it would be a good idea to add a AAA membership in case your car breaks down and you need a tow; so, you might decide to budget $35 per month for car expenses. After a few years (when you have more income coming in), you may decide that you want to be prepared to handle anything life throws your way AND you want to splurge on the $3 car soap
... then, you might decide to budget $50 per month for car expenses, which you think is more than you need but you decide to budget that much "just in case."
That doesn't mean you will actually spend $30 (or $35 or $50) each month on car expenses. Many months you'll spend nothing, and some months you'll spend hundreds. But if you have planned for those expenses in your budget and left the money untouched in your bank account (or in your safe or in your envelopes or wherever you decide to keep it), then it will be there when you need it.
And the same process I described above applies to anything and everything you might spend money on, now and in the future. It doesn't matter whether it's a pack of gum or a Corvette. To really get a handle on your finances, it's extremely important to see where every last penny is going and then come up with a spending plan for every last penny that is coming in. That's how you get started on the road to the things you say you want in life. You'll find that budgeting is a never-ending process. As life's circumstances and your goals change, you'll need to re-do it.
Eventually, hopefully, the spending plan will include savings for long-term goals such as a bigger car, perhaps a house, college for your child, and retirement. Those are the types of things you are dreaming about, right? And they are all admirable goals by the way. But they are going to take years and years of planning, hard work and patience. As one who had to learn how to track expenses and budget, I will be honest and say that it is not easy. I found it quite challenging. But it was worth it.
As they say, "A journey of a thousand miles begins with a single step."
So ... if you haven't done it already ... get that little notebook and start carrying it with you everywhere (get one for your husband too) and start recording every last penny that you spend, no matter where the money is coming from!
You see ... "Car" is indeed a budget/expense item. It does not matter whether you have saved money for it or whether you pay for it with your credit card, ANY money spent on your car for oil changes, new tires, repairs, etc. is a car expense and it needs to be budgeted for.
Just for example, let's say you have kept track of all the money you spent on your car except for insurance and gas (your car expenses) for 3 years and when you add it all up you see that you spent:
- $250 for new tires
- $15 for new wiper blades
- $180 for 9 oil changes (3 per year)
- $250 for repairs
- $18 for 18 times (every 2 months) vaccuming it out at $1 a pop
- $2 for car washing soap
- $90 for the annual registrations ($30 per year)
- $60 for state inspections ($20 per year)
When you add it up, you'd see that you spent $815 over 3 years. That means your monthly car expenses were $24. (Please note that I included even the small stuff like soap and vacuuming ... It all adds up, truly.)
When you make your budget, which is you deciding in advance how you are going to allocate your income, you would look at what you spent in the past and estimate what you will be spending in the future. Let's say your car is getting older, and you know you're going to be facing higher repair bills. You might decide $24 per month isn't going to cut it so you budget $30 per month. Then, you might decide that it would be a good idea to add a AAA membership in case your car breaks down and you need a tow; so, you might decide to budget $35 per month for car expenses. After a few years (when you have more income coming in), you may decide that you want to be prepared to handle anything life throws your way AND you want to splurge on the $3 car soap
... then, you might decide to budget $50 per month for car expenses, which you think is more than you need but you decide to budget that much "just in case."That doesn't mean you will actually spend $30 (or $35 or $50) each month on car expenses. Many months you'll spend nothing, and some months you'll spend hundreds. But if you have planned for those expenses in your budget and left the money untouched in your bank account (or in your safe or in your envelopes or wherever you decide to keep it), then it will be there when you need it.
And the same process I described above applies to anything and everything you might spend money on, now and in the future. It doesn't matter whether it's a pack of gum or a Corvette. To really get a handle on your finances, it's extremely important to see where every last penny is going and then come up with a spending plan for every last penny that is coming in. That's how you get started on the road to the things you say you want in life. You'll find that budgeting is a never-ending process. As life's circumstances and your goals change, you'll need to re-do it.
Eventually, hopefully, the spending plan will include savings for long-term goals such as a bigger car, perhaps a house, college for your child, and retirement. Those are the types of things you are dreaming about, right? And they are all admirable goals by the way. But they are going to take years and years of planning, hard work and patience. As one who had to learn how to track expenses and budget, I will be honest and say that it is not easy. I found it quite challenging. But it was worth it.
As they say, "A journey of a thousand miles begins with a single step."
So ... if you haven't done it already ... get that little notebook and start carrying it with you everywhere (get one for your husband too) and start recording every last penny that you spend, no matter where the money is coming from!
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