Budgeting is one of the most important financial habits to develop. There are so many budgeting methods out there to choose from, but it’s not just creating a budget that will set you up for financial success. Instead, it’s important to learn how to budget well. In order to budget well, it’s essential that we include all of our expenses in our budgets. Unfortunately, this is a little harder than it sounds. And this is because there are so many monthly expenses that we tend to forget to include in our budgets.
Hardly anyone would forget to include their rent or mortgage payment in their budget, but there are so many small items that tend to slip our minds. When you forget to include them, it can wreak havoc on your budget. Whether you already have a budget that is in need of updating, or you are creating your first one, here we’ll go over some of these often overlooked monthly expenses that you should include in your budget so that you, too, can budget well.
Why do we forget certain monthly expenses and how can we create a more accurate budget?
It’s easy to forget about certain expenses when calculating your monthly budget. How come? One reason expenses can slip your mind is if you don’t write down your budget, item by item. If you think you are following a budget, but it’s not written down, you very likely are not sticking to whatever it is you think you are following.
People also often forget to include the full cost of certain monthly expenses because they rely on mental calculations about how much something costs. When you do this, you can end up underestimating the true cost of things. Lastly, many people don’t account for sporadic costs or things that aren’t billed monthly. Quarterly or annual fees can surprise you and add up if you forget to prorate them and include them in your monthly budget.
If you are struggling with creating a budget, there are numerous tools and templates available to put you on the right track. As a first step to creating an accurate budget, let’s review some of the most commonly overlooked monthly expenses. If you remember to include these in your budget going forward, you’ll be that much closer to having an accurate and useful budget.
20 commonly overlooked monthly expenses to budget for
1. Emergency fund
Just because a third-party isn’t billing you monthly for it doesn’t mean you can afford to forget about your emergency fund. Build a contribution to your emergency fund into your budget. This way you'll be able to afford any unexpected (and unbudgeted for) expenses that may arise.
2. Retirement fund
Like your emergency fund, nobody is going to force you to contribute to your retirement, but you still should if you can. Financial guru Dave Ramsey suggests putting 15% of your monthly income toward retirement. By adding this amount to your monthly budget, you’ll hold yourself accountable. Plus, you'll set yourself up to be in the best financial position when it comes time to retire.
3. Extra debt payments
If you have credit card debt, you want to pay the minimum payment every month, at the very least. If you want to become credit card debt-free sooner, you will want to make more than your monthly minimum payments. Don’t forget to include these extra debt payments in your monthly budget.
4. Quarterly or annual bills
The majority of bills come monthly, but not all. Comb through your past payments and take stock of all bills that you pay less frequently. For instance, a quarterly water bill or annual professional association membership dues. Then, calculate how much that amount costs on a prorated, monthly basis, and include that figure in your monthly budget.
5. Home or renter’s insurance
Most homeowners choose to insure their belongings with homeowner’s insurance, and many apartment buildings require renters to carry renter’s insurance. Don’t forget to include your insurance as a part of your monthly mortgage or rent payment in your budget.
6. Medical visit co-pays
Your health insurance should cover the cost of most medical appointments, but it is important to budget for co-pays. At around $25 (or more) per visit, these co-pays can add up, even if you only go to the doctor for routine appointments. If you visit the doctor often, be sure to estimate how many times a month you go. Don't forget to account for these monthly expenses in your budget.
7. Dental and or vision expenses
Even if you have health insurance, dental and vision expenses are often not covered under that health insurance. Sometimes separate dental and vision insurance will cover part, but not all, of your expenses. Make sure to include expenses such as teeth cleaning, new glasses, and contact lenses as monthly expenses in your budget.
8. Prescription medication
Another medical-related monthly expense that many often forget is prescription medication. Prescription drugs cost the average American $1,200 a year! While your health insurance will likely pay for much of that, remember to account for your out-of-pocket costs in your monthly budget.
9. Parking and toll fees
Most people don’t forget their car payments in their monthly expenses, but that’s not all it costs to own a car. Especially if you commute to work, you will likely pay tolls and or parking fees. So be sure to remember those monthly expenses.
10. Subscription renewals
Whether it’s your daily newspaper, a beauty box, Spotify, Amazon Prime, Netflix, or other streaming services, there are seemingly endless subscription options. $12.99 might not seem like a ton of money, but it can throw off your budget if you forget to include it.
11. Beauty expenses
Reports vary widely on how much women spend on makeup and beauty products, but needless to say, it can be a lot. One survey found that the average woman spends $300,000 on makeup over the course of her lifetime! Even if you are on the low end of the average, you likely replenish a beauty product or two every month. If so, be sure to include those monthly expenses in your budget.
12. Cleaning supplies
Grocery store items that don’t need to be replenished every week or month are often overlooked when it comes to monthly expenses. Cleaning supplies, laundry detergent, and the like can really add up. Be prepared for an extra expensive grocery shopping trip once or twice a month to account for these costs.
13. Backup childcare
If you have children, you probably pay for childcare of some sort. Or you may count on school to watch your kids for a large portion of most days. But things interfere with your regular scheduled childcare all of the time. When they do, and you need to find and pay for backup childcare, you’ll be happy when you have anticipated this expense and budgeted for it.
14. Dry cleaning
Depending on your job and your wardrobe, dry cleaning might be something you do every week, every month, or only occasionally. No matter what, you’ll likely have at least a couple of items that will require a trip to the dry cleaner’s, and these should be included in your budget, too.
15. Formal occasion clothes
You might not need a new formal dress or suit very often, but an occasion will probably arise every so often that requires one. While you don’t have to break the bank to be fashionable, formal events sometimes call for a splurge or a new pair of shoes, and it’s always best to budget for this in advance.
16. Hobby supplies
Are you an avid gardener, knitter, baker, or something else? Hobbies can keep us sane and are definitely worth the cost. Just remember to account for how much it costs to keep up with your hobby in your budget.
Giving is popular around the holidays, but many people make charitable giving a part of their budget all year long. Whether you like to support your alma mater, friends participating in half-marathons and the charities they are running for, or any other worthy cause, be sure to remember this when you prepare your budget, too.
Christmas and birthdays are big-spending holidays for many people. If they are for you, you should take into account everyone you plan to buy a present. Don’t forget about other holidays where you might give gifts, too. For example, that Easter basket doesn’t magically arrive on your kid’s doorstep for free after all, right (or does it)?
19. Holiday extras
In addition to gifts, there are plenty of other ways to spend money over the holidays. From hosting a cocktail party for friends to decorating your home, be sure to include whatever “extras” you like to spend on during the holidays as part of your monthly expense calculation.
20. Fun money
Lastly, what would a budget or life be without some room for unexpected fun? By putting aside an amount dedicated for spontaneous fun, like a day trip to the beach, drinks with friends, or a date night with your husband, you’ll be able to enjoy these activities without stressing over whether or not they’ll break your budget.
Overlooked no more!
Budgeting is an art. It takes time to finetune your budget so that you’ve properly accounted for all of your expenses at the end of the month. Hopefully, with these reminders, you’ll remember to include all of your monthly expenses in your budget. Even these often overlooked ones.