According to a news report that appeared on the US News & World Report site in June 2015, people often leave out certain expenses out in their budgets. While they should include the following costs, they often bypass them when they are establishing a financial plan.
1. Taxes – Because employees normally have taxes withheld from their pay, they usually do not set aside money for additional taxes. For example, financial planners often see people take out their IRA distributions before they are 59 ½ years old and not budget for the additional taxes. This fact of life can also be an issue for anyone who sells annuities or stocks or needs to pay the capital gains on the sale of a property. You simply don’t want to get into a situation where you owe taxes. When in doubt, financial experts suggest that you consult a tax preparer or CPA so you can set aside enough money to pay a possible tax bill.
2. Support for Family Members – People also do not think about putting money in savings as a means of support for a member of their family. For instance, if a child or grandchild needs to be saved from foreclosure, you might not be able to help them. Or, if an ex fails to pay their share of child support, you might see yourself in a financial bind. That does not mean you have to necessarily lend monetary support to a grown child or grandchild. However, it is always a good practice to set aside a financial cushion in case a family member is ever in need.
3. Future Savings – Some people do not have to think about future savings as their company makes it possible for them to contribute to a 401(k) or a company-sponsored retirement savings plan. Saving for retirement should be made a priority but often is overlooked by some consumers in lieu of everyday expenses. The same holds true for saving for college. Start saving for the future now so you don’t have to save as much per month at a future date.
4. Repairs for the Home or Car – If you own either a home or car, you know that you will have to pay costs for maintenance. Instead, of taking out the money from an emergency fund, why not make home or car repairs part of your regular budget? Based on how many miles you drive, you should be able to calculate how much you will need to spend each month in repairs. For instance, if you drive about 5,000 miles per month, you probably will need new tires and brakes. Also, financial experts suggest setting aside about 1% to 4% of the value of your home for any planned maintenance. Take into account the age and condition of a home when planning a repair budget.