Listen instead

Every month has some expenditures which are “unexpected”. Most budgets I’ve seen have the notorious “Miscellaneous” entry, usually one in each month for $50 or $100. It’s amazing to think that we routinely have unpredictable expenses that add up to that much. Usually, these miscellaneous entries end up being impulse purchases such as snacks or drinks while you are out. These types of expenditures, grouped under a single budget item called “Misc”, are hard to track and don’t give you a clear picture of your spending.

In a typical monthly budget sheet, which simply lists your monthly expenses in a column, you cannot properly account for these “Misc” expenses. A better approach is tracking your expenses daily, as in CalendarBudget. You’ll probably still need to have an entry for “Misc” each month, but this entry should disappear as you make your miscellaneous purchases. As you make these impulse purchases, be sure to add the expense to the correct category (not to a “Misc” category).

Maybe you stop for a bag of chips and a soda. You may be tempted to lump it in with “Miscellaneous”. Instead, record this under a better category such as “Eating Out” or “Snacks”. Then at the end of a few months, you can adjust your regular categories to compensate for these miscellaneous entries and then reduce the monthly “Misc” entry to a more realistic number.

This will give you a better idea of your actual spending patterns and allow you to plan more accordingly for the future. Moreover, this technique gives you a more realistic picture of where your money goes. You may be surprised to see that you spend upwards of $40/month on snacks, or work lunch out, or whatever. After your budget reveals this to you, you can take some action to adjust your spending habits — perhaps reduce or cut out that expense and put that saved money into a long-term savings investment that will start working for you, as opposed to against you.