If you have prepared a budget but still making more expenses than anticipated then irregular expenses could be its major reason. Irregular expenses are unpredictable which can increase your monthly expenditure and create problems in your future plans.
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So in this article, we will discuss how you can make a budget for irregular expenses so that you can anticipate your expenses and savings properly and can prepare for the future accordingly.
Method to budget irregular expenses
Below are the steps which you have to follow if you want to manage your\ unwanted expenses properly:
#1 Identify your irregular monthly expenses
In the first step, you need to identify your irregular expenses for the past month. Irregular expenses are different for a different person but some common examples are as follows:
- Expense on movies
- Expenses on food from the restaurant
- Health expenses
- Expenses on a school project of child
- Any other such expense
Make a proper list writing all such expenses properly in the first step.
#2 Eliminate unnecessary expenses
Look if you want to save money then you have to cut down your expenses. In the next step identify all such expenses which you can easily avoid and are not necessary for your life. For example, if you are ordering food from a restaurant four times a month then you can cut it down to 2 times a month to save money or if you watch 3 movies in a month in a theatre then you can cut it down to one. On the other hand expenses on health and education are necessary and you cannot cut down on them.
#3 Prepare a separate fund for irregular expenses
In the next step, you have to prepare a separate fund for estimated irregular expenses and have to make it a part of your monthly budget. Additionally, you have to prepare an emergency fund which is equal to 10% of your monthly expenses ( it includes both common and irregular expenses) which you can save in your bank savings account. So that you have sufficient money to face any emergency related to health or any other situation.
#4 Invest extra money and create an additional income source
In the final step, you have to invest all your money which is left after deducting your monthly expenses. You can only make unnecessary expenses if you have money to make it. So it is better to invest your money in the stock market or in a business so that you cannot make unnecessary expenses and also earn excess income.
Look if you are reading an article on How to budget or how to reduce unnecessary expenses on the internet then you have to accept that your financial condition is not that good and you have not achieved financial freedom in your life. So in my opinion you should focus on new income-generating activities and try to create a new income source either actively or passively. There is a lot of chance that you might be actively busy in any other work as your job or business. So you should focus more on passive income. You can earn passive income in so many ways. For example, you can earn passive income from stocks, you can earn passive income from real estate, you can earn passive income from a business, and in so many ways. But you should avoid some investments in the stock market which are too risky and avoid some common failures in business if you want to earn extra income.
You have to first analyze all irregular expenses and have to make a proper list. After that, start eliminating all unnecessary expenditures to save a lot of money and prepare a proper fund and extra 10% of your monthly budget for all such expenses which you cannot avoid. At last, start investing all your money in the Stock market, Fixed deposit, real estate, or in any business to generate extra income on a monthly basis so that you can easily achieve financial freedom in the upcoming future.
We can easily conclude that it is essential to analyze all the expenses and income to prepare a proper budget. A person should avoid all the unnecessary expenses if he has not achieved financial freedom in his life. A person should invest his excess money in the stock market, real estate, or in any other investment which can give him good returns passively so that he or she can get out from the vicious cycle of money and can focus on other important things and can live a happy and successful life.
Frequently Asked Questions
Why is it necessary to prepare an emergency fund?
You have to prepare an emergency fund which is equal to 10% of your monthly expenses ( it includes both common and irregular expenses) which you can save in your bank savings account. So that you have sufficient money to face any emergency related to health or any other situation.
How to eliminate irregular expenses?
You can easily eliminate irregular expenses by investing your excess income. If you do not have income to spend then you will not make unnecessary expenses.
How to get financial freedom in life?
To achieve financial freedom in life, you should focus on investing your money instead of spending and must try to create more and more passive income.