The "One Offs": 4 Steps to Nailing It

Do you ever splurge and immediately start justifying the expense by telling yourself "I never do this!".

Or, do you get slapped with a major expense and when you can't make your budget line up at the end of the month, go straight into defense mode of "Well, I had to buy new tires". I'm going to break it to you gently, these are not rare unicorn expenses. And I apologize if that bursts your financial denial bubble.

OK, here me out. Now that I've brought this behaviour to your attention, does it sound familiar? The only reason I'm calling out this behaviour is because I have been there, done that. I'm also raising awareness around it because it is almost a daily conversation with clients. Here's a tell tale sign to learn if it's happening to you, you have credit card or line of credit debt. I don't mean a line of credit that renovated your kitchen or funded an investment property, I mean the line of credit that is like a thorn in your side and you're not quite sure where it came from, THAT line of credit. These debts likely accumulate at the pace of the one offs.

Here are some examples of one offs that can throw you over budget:

Vet bills
Car repairs
Home repairs
Medical issues

We've all been there righ? The more you have, the more likely these will creep up. I can list how many of these that have already happened to our household this year alone! We've had to buy new tires, replace the rear brakes, our dog has Lyme and needs regular testing, the washing machine was acting up, and don't get me started on the boat! But guess what? We've insulated our home against these expenses and are protected againts accumulating debt. I bet you want to know how to prevent these financial attacks? Each household is incredibly unique, so there isn't a once size fits all, have a look at the strategy below.

Step#1: Know the amount of money that lands in your bank account each month

Step#2: Know your approximate recurring expenses: Shelter, food, subscriptions, insurances, internet, cell, gym memberships, piano lessons....you get it.

Step#3: Step#1 minus Step#2 = money to fund your lifestyle

Pause here, how does this look? Say you have $2000 left after paying alllllll of your bills, that's $500/week, does this work for your family? What we're trying to achieve is making sure your lifestyle is within your means.

Step#4: Now you need to set aside money for the one offs,if you're one of the few fortunate ones who has an extra $200/month kicking around from Step#1-Step#3, then good for you! Save that $200/month and off you go! But if you're like many of us, you're making ends meet and that's it.

Where do you find extra money?

Income tax returns.
Bonuses
Selling items on marketplace or kijiji.
Reduce expenses: Tidy up your subscriptions, call around insurance companies, reduce your banking fees. You should be doing a financial audit on these annually.
If you earn over a certain salary, you may have your CPP and EI paid up before year end, stash those extra funds away.
Paid bi-weekly? Fix your budget to 2 paychecks per month, on those 2 months per year you get a 3rd payckeck, save it.
Daycare expenses drop off or decrease.

Once you've determined how you're going to fund this savings, there are a few things to keep in mind. First, don't let this money burn a hole in your pocket, we're far too often in a hurry to spend that income tax return before it's even landed in the bank account. Sit on it, think about it, just don't spend it! Second, this money is not for dooms day scenarios, it is to tidy up the months you had an expense beyond your income. You don't need to be a Scrooge about it, you just have to start practicing putting money aside, and taking out when needed to avoid debt. It's a mindset shift, but trust me, you're going to love it!