Don’t make too many exceptions for the “exceptional”
Putting money into your savings account at the start of each pay cycle can feel good. It’s satisfying to take a step towards your financial goals.
But if you regularly raid your savings for unplanned costs, watch out. You might be falling for a case of one step forward, two steps backwards.
A study cited here tells how people tend to forget about “exceptional” expenses when they make their budget. So a new computer, costs associated with special occasions (such as an anniversary or friend’s wedding) or other one-offs may require a dip into savings ear-marked for a different purpose.
One way to overcome the problem is to work in an “exceptional” expenses line into your budget or put aside funds in a dedicated account – after all, they happen fairly regularly.
Are you superhuman?
Our simple flow chart “Are you superhuman?" highlights the importance of keeping a budget. People who don’t have enough savings “to last forever” or who are not superhuman should keep a close watch on money they have coming in and how it is being spent, saved and invested.
After all, this Ask Ian blogpost tells how even professional footballers earning vast sums can run into financial trouble.