Kids are all about the unexpected, and that includes expenses. From an unexpected school fee to the discovery that braces are needed, these expenses can take you by surprise at best and leave you having to do without at worst.
You can save yourself stress and even financial hardship when you take steps to be prepared. Another reason to anticipate the unexpected expenses related to kids? Things often wind up costing more when you don’t take care of them early. A cavity can turn into a root canal, a library fine can grow out of control, or you can lose out on the 15 percent early bird discount for soccer camp.
Many times we avoid worrying about the unexpected expenses because, well, we don’t want to worry. For example, you may be told that your daughter’s dance lessons fees will be going up in the fall, but because it is unpleasant and doesn’t have to be attended to immediately, you put it in the back of your mind. Then, when the fees become due at the end of the summer, you may not have enough in your budget to cover the new costs.
It is important to anticipate upcoming expenses, both those you may have known but forgotten and those in which there was no way of knowing. While you might be kicking yourself over the dance fees or soccer camp, there was no way of anticipating that your son would break his arm falling off of the school playground, necessitating a large co-pay for the emergency room.
First, get out your calendar, and if you have last year’s one lying around that is even better. Take 15 to 20 minutes to go through it, jotting down the anticipated expenses. Start with the ones you know: the lessons, the camps, the school fees, etc. These should have established costs. You’ll need to include them in your monthly budget. For example, if camp costs you $350 each summer, break this amount down over the 12 months and put aside $30 a month to cover the costs.
Don’t forget to include things such as teachers gifts (holidays and end-of-year), classroom party supplies, birthday party expenses and gifts, graduation, etc. It all adds up, doesn’t it?
Next, establish an emergency or “unexpected expenses” fund, approximately two to five percent of your income, for everything that might come up. Your sixth grader loses his required gym uniform, done. The softball coach is recommending an intense one-week batting clinic, no problem.
Finally, consider earmarking money for what may be known as a “sink” fund. These are replacement expenses on larger kid-related items. For example, you know that your car will only fit two car seats in the back, but you are planning on having a third child and will need to trade the car in for a minivan. The bunk beds on are their last legs. Your violin virtuoso will need a larger instrument in two years.
Having the insurance of extra money in the bank will keep you stress free and on track for whatever new child-related expenses arrive.