How do you budget for flex or variable expenses? Do expenses pop up and throw you off every month?
Fixed expenses are the same monthly, but flex expenses are predictable too! You can forecast these expenses and stop getting blind sided with bills.
There are seven categories for flex expenses. We’ll dive into each category for flex expenses in detail:
- Weekly cash
- Maintenance
- Medical
- Projects
- Celebrations
- Travel
- Fun
This is part five of the series: Create Your Annual Budget with Me.
You can create your entire annual budget in advance! Catch up on the series here:
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How much you can spend on flex expenses
First, find out how much in total you can spend on flex expenses for the year. Get this number simply by subtracting the total of your fixed expenses from your take-home pay.
As a recap, the six categories for your fixed expenses are:
- Saving
- Charity
- Housing
- Insurance
- Services
- Debt repayment
What’s left is how much you can spend guilt-free annually on flex expenses.
Seven categories for flex expenses
The seven categories for flex expenses are listed in order from needs to wants. The first three flex expense categories: weekly cash, medical, and maintenance are necessities. Budget for these first and then what’s left is for the other categories projects, celebrations, travel, and fun.
1. Weekly Cash
The first category for flex expenses is weekly cash. Budget a set amount of cash each week for day-to-day purchases. This helps pace your spending throughout the month and takes out the guess work in budgeting.
This is a brilliant system for managing money for day-to-day expenses in areas people tend to overspend like groceries, gas for your car, small gifts, clothes, and entertainment.
I personally take out $120 cash for day-to-day spending. It’s worked like a charm for over a decade.
2. Medical
The second flex expense to budget for is medical costs. Your health insurance premium is a fixed monthly expense. Throughout the year you’ll have additional medical expenses like doctor’s visits, prescriptions, surgeries, prenatal care, vet visits, eye doctor, dental, therapist appointments, etc.
Medical bills don’t need to be unexpected. You can forecast these. by familiarizing yourself with your health care plan and reviewing how much you spent last year.
3. Maintenance
The next category of flex expenses is for home and car maintenance or repairs. HGTV recommends setting aside 1-3% the value of the home for maintenance every year. This can be upkeep for things like your roof, foundation, heating and cooling systems, plumbing, etc.
Common car maintenance includes oil changes, car registration, inspection, new tires, or air filters. Check your car manual for routine maintenance.
4. Projects
Projects are items on your to-do list for home improvement. These are wants versus needs. Examples of project expenses are decorations, furniture, appliances, linens, painting, new carpet, or moving expenses.
5. Celebrations
Have a plan with how much you’ll spend for holidays throughout the year. This includes birthdays, graduations, baby showers, graduations, weddings, anniversaries, and seasonal holidays like Halloween, Thanksgiving, Christmas, New Year’s, Valentine’s Day, etc.
Extra costs include gifts, invitations, throwing parties, etc
6. Travel
Next you have expenses with travel and vacations like the cost for flights, hotels, sightseeing, hunting trips, retreats, conferences, road trips, etc.
7. Fun
The last category for flex expenses is fun (or everything else)! Common expenses include haircuts, hair color, mani/pedi, massage, clothes, shoes, electronics, concerts, events, workshops, clubs, memberships, sports games, etc.
You can have a plan with your money, even flex expenses with these seven categories! Think through what’s going on in your life, that will also cost money. Then put a dollar-sign to your to-do list.
