by Jon Mohatt (aka Travel Brainstorm)
In order to travel without incurring debt, one needs points and/or money, and to ensure you have these resources, you have to budget successfully. If you’ve been following my blog for long you have probably already read my post “Steps to Create a Budget and Maximize Reward Points“, where I show just how easy it can be to create a budget that helps you maximize your reward point accumulation. It’s easy to plan, collect and utilize reward points, but also just as easy to disregard or stop following your budget because you claim it’s impossible. My wife and I have followed a budget for decades and it’s not always been easy, but we have been persistent because we love to use our money and reward points to travel and create memories for our children. The number one key to a successful budget for us has been the elimination of surprise expenses and the way to do this is to have a “Dues & Renewals” budget category where one can accrue for all those expenses that everyone seems to forget about due to their infrequency. A “Dues & Renewals” category, along with your emergency fund will protect your budget and make it possible to follow. Without a “Dues & Renewals” category you will always feel like there are surprise expense’s that are throwing your budget off track. Let’s look at how one can create and add this category to their budget.
What exactly is a “Dues & Renewals” category? It’s a category that contains all those reoccurring expenses that don’t quite fit in any of your other categories and one tends to forget. I have followed our expenses for several years and have added many expenses to this category to the point now where we accrue enough every month to cover almost all expenses that come our way. A “Dues & Renewals” category also protects your emergency fund and reserves it for true emergencies and not for when an annual due you forget about comes due. To get you thinking about what these expenses are, I have included the ones we track below. I’m sure you’ll think of others.
Once you come up with your list all you have to do is calculate what each one costs per year, add them up to come up with your annual expense and then divide by twelve. This tells you what you need to accrue each month to cover the expenses as they occur or are billed.
Your “Dues & Renewals” list will vary depending on what you subscribe to or purchase on any regularity. One may put their auto insurance in their “Auto” budget category, we just choose to keep all our insurance payments in this category as a personal preference, but the choice is yours. The point is to just capture all those pesky expenses that pop up only once or a few times a year (we pay our auto insurance quarterly) so the money has already been accrued and is sitting there when the bill arrives, making it easy to pay, and therefore, not busting your budget.
I’m sure at first you may miss some expenses, but over time, you will add and adjust the items included in your “Dues & Renewals” category to get it right and the surprise expenses will disappear! If you would like to get a copy of the Excel template I use to track this category just “Like” my Travel Brainstorm Facebook page and send me a request via the Facebook “Message” function at this top of my Facebook page.
As always, happy brainstorming and safe travels! Be sure to sign up to be notified of future blogs posts (top of right sidebar), let your friends know about this blog and check out my travel reviews on TripAdvisor, just search for “TravelBrainstorm”!