Miscellaneous (Spending Category Part 10)

Image courtesy of K_Kemruji at FreeDigitalPhotos.net

Overview
“Miscellaneous” is part 10 of my writing series. To see full complete spending categories, read my February 2016 newsletter at www.PrudentMoneyCoach.com.

We have almost come to the end of Spending Categories from Crown Financial Ministries Canada Percentage Guide. After this topic, we have Investments and School/Child Care topics left.


What are the Expenses?
Miscellaneous is a category where you put all other expenses that do not fit into any other categories. For my family, these could be allowances, gifts, household expenses such as shampoo, laundry detergent, bathroom tissues, and others. Because this category is like a black hole for expenses, sometimes this is the biggest expenditure in our budget. Often when I want to revise my budget, I would look at this category and find out why we spent so much here.


How to Improve or Reduce Miscellaneous Expenses
These are examples from what I have heard from family, friends, and clients. It may be different than yours, but the idea is the same – look at your expenses and see if any can be cut.

1.Know When to Buy
When my kids were younger, we often received birthday invitations. On average, I would say we attended one or two parties per month. Sometimes we had two or three parties on one weekend. While it was fun for the kids, it was not easy on our wallet. If an average gift was $25/child, it would mean an extra $100 in gifts for a month when we had 4 birthday invitations.

So, I started to keep an eye on sales. If I see an interesting toy with an attractive price, say a tea party set for $5, I’d buy two, trying to predict future invitations and thinking I can save some money. Another time I may see a cute hanging basket for kids’ closet for $1. I bought 5 of them. Or how about medium-size stuffed animals for $2 each? These gifts come in handy for birthday party gifts, souvenirs, or going-away gifts for kids.

Well, it was a brilliant idea, except that if you don’t get as many birthday invitations as you expect, then you’d end up with a closet full of new things. Hmmm..….. I see how tough it is to work as a buyer for a store, trying to predict what would sell, or in our case, how many invitations we would get. Plus, as the kids get older, there are less birthday invitations. And with older kids, come pickier taste. Often older kids are quite specific on what they like or don’t want to receive. In the meantime, I still have toys fit for younger kids in my closet. Now, is this a good money-saving move?

I’d say, back then, when my kids were younger and birthday invitations were plenty, yes, it was a good idea to buy stuff on sale in anticipation of future parties. Now? Not so much. So, my strategy now is to buy gifts WHEN we receive invitations. From time to time, I still buy a few items (one or two) when I think the price is really good. But most of the time, I try to avoid shopping areas because I can always find something to buy and justify the purchase.

2.Find Ways to Reduce Expenses (but Spend When It’s Worth It)
Technology changes many things, including how I correspond. In the past, I used to buy cards, print pictures and mail out birthday cards for everyone I care about. Sadly, sometimes those cards never made it to the destination in foreign countries. I didn’t bother purchasing a tracking code because the cost is more expensive than the card. I find that for younger friends and relatives, there is no added value for physical cards and photos. So, why bother spending money and time purchasing the cards and printing out photos? An email or a social media messaging system (Facebook, WhatsApp, etc.) works as well. However, for older relatives and friends who cherish physical cards and photos, I would still purchase cards and print out pictures. The expenses are worth it. Some of the pictures I sent to relatives and friends end up in picture frames, on the cover of someone’s book, or part of a collection of photos.

Another technology advancement related item - paying for bank fees - does not make sense for me. So, depending on the bank, I would suggest you to try to keep a minimum balance, or switch to a different bank that does not require minimum balance. I find that some online banks such as President’s Choice and Tangerine, do not require minimum balance, allow unlimited withdrawals, and will even give you interest (albeit small) on whatever balance you have. President’s Choice even provides cheques for free! Having said that, I do recommend that you leave some money in your chequing account to avoid negative balance (which would equal fees!) and for easy access when you need the money. By the way, I am not receiving any commission from President’s Choice or Tangerine. I just like their products.

​3.Know that There are One-Time Spending (or Spending that does not Occur Often)
Examples of these are pots, pans, cookie sheets, storage boxes, computers, etc. You need them, but they are not your monthly purchases. Make allowance for these.

4.Large Annual Spending Items
What do I mean by these? Christmas spending, summer vacation, family reunion to name a few, are examples of spending you may have that occur once a year or once every few years. I used to put them under Miscellaneous, but it bloated the category constantly. Now I separate each large spending (e.g. summer vacation) into its own category.

5.Unexpected Spending (or One-Time Large Bill)
As we age, so do our parents and loved ones. Many of my friends (and us too), have had family emergencies when we had to fly home or out of country because someone is really ill. When you have emergency fund available or allowance in your Miscellaneous category, you have one less worry (no money worry) and you can focus on getting to your loved ones and staying by their side. It also allows you to be generous in helping others financially.

Conclusion
Just like everything else, miscellaneous expenses are what you need to spend and must be part of your budget. The key to having it under control is to know what you must have. Everything else can be adjusted.
 
For more help with reducing your money-related stress, contact me at (six zero four) 728-5139 or Effie[at]PrudentMoneyCoach[dot]com. Take advantage of my free first assessment meeting to see if we are a good fit. 

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