Variable and Unknown Expenses
How do you budget for the variable and unknown expenses?
Variable - how much to set aside for medical, car expenses, home maintenance.
Unknown - I was thinking about putting money aside for a new computer for my husband, but then thought- what about all of the things like that that I am not even remembering that we will need eventually... the medium things that aren't a cup of coffee but we don't need to save for months.
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For the variable things: when starting, just guess. Then, you will see how much you spend with time and you will adjust accordingly. That's why some people start with a "Things I forgot" category to leave some money aside for easy adjustments. If after some time you think you spend too much in one of those, you will then have to decide how to rein in your expenses but for the moment, you don't know how much you are spending so it's not possible to do.
For unknown: here it varies depending on people. If it's something small enough you don't have to save for it for months, then sometimes you might simply need a catch-all category (e.g. household goods). You contribute to it every month and it's actually a "variable" category according to the split of your initial post.
For items you own and you know you will change in the future (e.g. phones, computers, appliances, furniture, car, bikes...), the best is to have saving categories for all of those, separate per item or bundle per type. You can figure out the likely maximum amount you would spend at once for each category (hopefully you can change your appliances one at a time for example) and a frequency you need to change them. Then you can put a save by date goal on those categories for YNAB to calculate a monthly contribution. Make sure to be generous in the maximum amount per category just in case you need to change a lot of things at the same time. If you have a category per item, it can be easier to estimate how much to save but it ties down more money.
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Ceeses Thank you! I think over time it will be more clear. Just this initial trying to figure out all the details is a struggle. I like the ideas of the things I forgot and also bundling categories. Thanks for your advice.
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TYA One more thing to remember: most people will change their budgets after a few months, years etc. Your categories are not set in stone. Ask questions, take the approach that makes the most sense to you now and then if you finally don't like it, ask again for an alternative.
Plenty of people even do Fresh Starts to completely change their categories. Fresh Start is an option in YNAB that will create a new budget (and archive the old one). The new budget has the same accounts but without the past transactions and updated starting balances to the balances on the day of the fresh start. The budget starts with the same categories as before but since all transaction history is wiped out (but available in the saved budget) it is easier to perform massive category reorganisation.
At the opposite, some people prefer to put the work to reorganise their categories in their current budget to keep all historical data in one place. There is no right or wrong way here, just different options.
Good luck getting setup.
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Depending on the age of your home and appliances, 1%-2% of purchase price/year for home maintenance.
For medical, I start the plan with my Out of Pocket Max fully funded. My goal is to have This Year and Next Year out of pocket max funded.
For technology replacement, I budget $62/month (but I'm only one person).
For car maintenance, I put a cap on the category of $2K so I fund at about $50/$75 until I hit the cap.
I save for everything on a monthly basis so that as much as possible my budget allocation are the exact same every month - groceries, eating out, personal care, clothing, utilities, mortgage, investing, Christmas, birthday/other gifts, charitable giving, tithe, holiday decor, entertainment, fuel, parking, vacations, etc (approximately 60 categories). And then with my leftover money, I fund things that I am saving up for. (I budget only once a month using my income from the previous month - ie January 2021 was fully funded with my 2 paychecks from December).
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jenmas those numbers for maintenance/medical etc. are really helpful. Thanks!
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If you're like many people, your credit card's yearly summary is a wealth of information for planning (possibly adjusted downward for some things to fit current priorities and income level).
