The Expert Podcast

You probably have a monthly budget that you track every month things like rent mortgage car payments groceries insurance and you keep track of your income you have your paycheck every week or every two weeks and every month you have your expenses that come out of it and that's your budget and that keeps you on track for savings or for retirement or just making sure that you have enough funds but emergencies come up and that's why if you follow things like you know the dave ramsey financial peace plan they have the emergency fund or you might want to keep some money on the side in case something goes wrong.

But it's important to recognize that most emergencies aren't really emergencies in fact there are many secret stealth hidden expenses that you don't have on your monthly budget that come up that seem like they're emergencies and many times these are the items that put somebody in financial distress they're things that if somebody is bankrupt or somebody is evicted they say well it's because i had this event happen this big emergency.

Some emergencies aren't quite that catastrophic they may just push set you back a little bit like the transmission blows on your car or you have a health event that you know cost you a thousand dollars in the emergency room so let's talk about these hidden stealth expenses that some people call emergencies and how can we change the mindset so they're not catastrophic and they don't create a permanent or financial crisis that makes it hard to crawl out from.

Many of these things that you look at are like we said transmission blows on your car two thousand dollars that's an emergency hit your emergency fund um your pet has to go to the vet that's five hundred dollars you have to go to the doctor there's a thousand dollar deductible even smaller items that aren't on your budget that come up that pinch the profit and loss of your monthly expenses sometimes seem like they come out of nowhere like oh it was your cousin's birthday you had to buy a birthday present your sister's getting married you had to buy a bridesmaid's dress um there was some party you have to go to to bring a gift to.

There will always be these things coming up you know if you look at your budget and say well we didn't have as much money this month because it was my sister's birthday that's only for this month well every month it's going to be somebody's birthday every month there's going to be some event at the end of the year you're going to have christmas you have to buy christmas presents that happens every year if you had to buy birthday present for somebody in july this july isn't the only time they had a birthday they had a birthday the year before right.

Even if they're not things that are catastrophic there are things that are constantly eroding your net worth that you don't even know about if you own a home your roof has a 20 or 30 year lifespan a roof could cost thirty thousand dollars that means over the course of the life of that roof it costs a thousand dollars a year for that roof to deteriorate that's a hundred dollars a month unless you're putting that money away every month when that roof needs repair in 30 years it's gonna seem like that thirty thousand dollars is an emergency it's gonna seem like that thirty thousand dollars is unexpected you may vaguely know that it's coming but you're not necessarily budging for it or may maybe you are but some people aren't.

Transmission on your car breaking those are things that come up on a regular basis it may not be expected it may not be if you have a low mileage car you may not think your transmission is going to break but something is going to happen you just don't know what it is and if you look back in your budgets for the last three or four years you may find that the amount of these emergencies or these unexpected things it's going to be about the same every year they may be different things maybe last year wasn't a transmission but you needed tires for your car maybe the year before it wasn't a doctor bill but your water heater broke and that's 400.

Every year these unexpected things are going to come up on a regular basis if you look back at your budget and your financial history you'll see every year certain things come up you won't know specifically what they are until they happen but that's the worst time to start thinking about how you're going to pay for it if you look and say well every year there's four thousand dollars worth of these unexpected things unknown things that means if you budget maybe 400 a month you'll be able to absorb those if that's your history.

Look i get it it's easy to say hard to do it's easier for me to say you should save this money right i know budgets are tough i'm not trying to to tuck down to you or make it seem like it's condescending but to try to smooth out some of these expenses if you plan a budget for having these things come up it'll make it easier when they do.

Now what does that mean you're not going to magically make 400 come out of thin air but if you know that your actual real budget has 400 extra per month of expense in it you'll be able to make other decisions maybe you don't spend as much on gas or groceries maybe you find a way to earn some more money that urgency of having the 400 as a real actual expense will make you look at the overall picture in a different way not just things that you know come up every month you know your rent is going to be you know two thousand one hundred and fifty dollars every month month and month out you can expect that because that's a thing your car payment is 362 dollars a month if you have one that's a thing your grocery bill right you know what those things are.

These other variable unexpected things may you may go three months without one and then when one shows up for a thousand dollars you think that it's unexpected you think that it's not part of your real budget in fact in historical terms these things have been happening all your life and have been happening to people all of your life so if you find ways to average out what they are and just put the money away so not only do you have an emergency fund but you have an emergency expense emergency budget line item that way you really will never have to tap your emergency fund because most of the things that are emergencies really are predictable again not the specific item but in general that these things happen.
Birthdays pet to the vet new roof on your house repair the water heater go to the doctor transmission on your car look the list is endless if you sit down and write a list of all of the things that were not monthly budgeted items cell phone bills things like that things that are outside of that scope go back a year go back a year and a half you can think of dozens of them i'm sure school field trip cost fifty dollars uniform for the soccer team cost eighty dollars right these are things that come up.

If you at least think about the future if not go back to the past and put something a block out in your budget of this much 300 a month 350 a month now you'll know that this is your real budget and you won't be leaving anything out because if you leave them out at the end of the month you have no money it's like well where did the money go well that's where it went it went to these things that always happen but they're hidden they're secret they're covert they're almost like stealth expenses.

So again i'm not trying to say that it's easy to do because you can't magically make money show up in your budget or your income but at least knowing about it will give you some comfort that you know really where you stand that it won't be stressful or give you anxiety to say look i did a budget i had all my money my income my expense but i don't i never have any money it's always less than what i thought these hidden secret things making them more conspicuous will help give you comfort that your budget is actually working.

Because if you don't put them in it can you can demoralize you it can give you it can give you um your confidence problem that budgeting actually works because if you try real hard with your budget and you have numbers and figures and an income and expense and you and you concentrate on it but still the math isn't adding up because you're not seeing these things it might make you give up and surrender on even trying to do a budget so putting these things in might help help give you more confidence.
I hope that helps stay tuned for more videos about how to put more power into your personal results.