Wednesday, July 8, 2015

Budget Assessment 2: What’s missing in the budget?

Before I really dive into each category and assess what we’re spending our money on, I’d like to take a moment to talk about what is currently missing from our budget. Several biggies jump right out from our recent experiences.

First, we do not have enough budgeted for medical expenses each month. I looked at the last three years and we needed an average of $200 a month for medical expenses. Our current budget has a mere $60 a month allocated towards medical expenses and that’s also supposed to cover savings if our emergency fund needs replenishing. So there’s the big, huge, right-there-in-my-face, obvious reason we continue to stay in medical debt despite “paying off” the debt a couple times. We need to stop planning for a great, healthy, uneventful year and start planning for more medical expenses.

Another biggie, we do not have anything budgeted for pre-school and yet we will owe $260 a month starting in August and continuing through April. Really, this will be an ongoing expense since we intend on keeping them in pre-school until they enter the public school system. There is the possible exception that next year one or both will be accepted into the early public pre-school program due to their developmental delays and there will not be a cost associated with pre-school. I don’t want to plan on that though because I am very hopeful all the hard work we are doing will have them caught back up with their peers soon. The most conservative approach is to plan on spending $2,800 a year on pre-school and start budgeting for it in a monthly basis.

I’ve become skeptical that $1,000 is enough of an emergency fund, seems like the emergencies we have carry a bigger price tag. The other concern I have looming in the back of my mind is what happens if I lose my job for some reason. $1,000 would not cover that type of emergency. We need to re-assess if we really feel comfortable having only $1,000 in the bank to fall back on and balance that against our debt free goals.

The last issue that’s been looming in my mind for the last year is retirement. S has absolutely nothing saved and I have a meager $15k in an IRA that I rolled over from previous employers. I have not enrolled into my current company’s plan which matches 3%.  We’d need to squeeze another $150 out of the budget each month in order to be able to at least put in the minimum for the company match.

So there are the items I’d really like to have in the budget as soon as possible.

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