Hey, guys.
It's Chelsea from The Financial Diet.
And this week's video is brought to you by Skillshare.
And this week, we are going to be talking about the expenses
that you are probably not including in your budget
but you should be.
Because often, at the end of the month when
we feel like our goals and ideas for our money
and our actual money aren't lining up the way
we thought they would, and we have
that feeling of but I stuck to my budget
and made all the right choices.
We're often misaligned because of those little sneaky expenses
that we tend not to notice until it's too late.
You want to over account for everything
so you'll never be caught off guard by anything.
And since there are 15 of these expenses to add to your budget,
let's not waste any more time.
Number one is annual fees.
This is things like fees for your credit card,
Amazon prime, your annual car registration,
renewal fees on software subscriptions,
your AAA membership fee, et cetera.
Go ahead and make sure to put reminders on your calendar,
for when these things are due and account for them
in your savings and spending budget.
If your fee is annual, break it down
monthly assuming your budget is done monthly
so that it can neatly fit into the rest of your expenses.
If an annual fee is $120, tack on that $10 a month.
Number two is holiday gifts and other related spending.
While it would be nice to forgo gifts and just enjoy
the quality time spent with loved ones
that the holidays can provide, this is America bitch.
We're about the gifts, we're about the swag,
your mother is a money time spent with you
by the fire telling family stories.
She wants an iPad.
But in all seriousness, for most of us
if we are planning on doing some holiday
spending on things like, gift, travel, decorations, et cetera.
We can have a tendency to be overwhelmed by the cost,
and since it comes at the end of the year,
it can often end up derailing the rest
of our good yearly behavior.
So do yourself a huge favor and create a dedicated holiday
budget that includes everything.
Gifts, and that way you can stick to the budget well ahead
of time, and decide who's getting the iPad
and who's getting cookies.
We're talking holiday travel so that you're never caught off
guard by how much it costs to go fly
to see a loved one, decorations, if you're putting up
decorations in your own home.
And any other auxiliary expenses.
I recommend setting this budget up well
before the holidays are around.
No reason you couldn't do it now for this year's holidays.
The point is you want maximal time to save for it
and minimize the extent to which you'll be surprised by how
expensive the holidays can be.
Number three is seasonal utility increases.
For instance, depending on where you live,
your utilities will tend to be quite different in July
than they are in January.
For those of us who live in New York City with steam heat
and window units in the summer for AC,
we will often spend on average about $50 to $100 a month more
in the summer than we do in the winter.
Take a look at your past year's utility bills,
note the differences in months, and actually integrate them
into your budget.
And you can extend this beyond the basic utilities
and also account for auxiliary weather regulation
in your home, which can include things like,
space heaters for that one weird room
in your house that never gets hot like our guest room.
It's like there's dementor in there all the time.
Or it could even be things like humidifiers and dehumidifiers,
depending on your weather needs.
And don't think that just because one of these things
is small that they don't add up.
Consumer reports estimates it would cost just under $3 a day
to run a space heater during your waking hours.
That's over $84 a month in additional utility costs
for one measly space heater.
Number four is feminine products and personal care items.
These are often the types of things
that you can just pick up absentmindedly while
shopping that add up to huge cost at the end of the month.
Even though tampons and other period products
are an essential need for women, consumers still
have to pay a sales tax on them in 35 states.
The average sales tax in the US is 5%.
So a $7 box of tampons will cost about $0.35 in taxes.
The average woman will use about 240 tampons a year,
which comes out to about $50 each year with tax.
And if you're not including personal care items
as a line item in your budget, it is time to do so.
Take a look at the past few months of spending
and see how often items like this end up working their way
into your cards, without necessarily
being reflected in your budget.
From tampons to ibuprofen, to makeup, to toothpaste.
The point is not necessarily to cut any one of these items
out specifically, for example, if like me you
spend a good amount every month on dry shampoo, that's
your life to live.
But do make sure that it gets accounted
for even when it doesn't neatly fit into any other item
category.
Number five is pet costs.
According to the ASPCA, the annual total cost
of having a dog can run between $1400 and $2000 a year,
when you tally up food, grooming, medical care, toys
and supplies, et cetera.
It's around $1,100 a year for cats.
And if you're spending $100 or more on something a month,
it definitely needs to be a line item in your budget.
And if like me, you have a pet you travel with frequently
or who has health concerns of any kind,
that number can easily go way, way up in a given year.
Pet insurance can be a great option
although it's not a perfect solution for any given
situation, but making sure to integrate
the expenses of your pet and to account for when things
aren't going totally perfectly.
For example, senior pets have much different considerations
than puppies or kittens do, is an important way
to ensure that you'll never be caught off guard.
Number six is pet sitting, plants sitting,
and house sitting.
Now my previous point only spoke to the cost of owning a pet,
but not necessarily to ensuring they're
cared for when you're gone.
That could include things like dog walking, someone
babysitting your pet while you're traveling or out
of town.
When it comes to things like your plants,
it could be someone coming by to water them
on a certain schedule when you're not able to do so.
It could be someone housesitting for you while you're
gone for an extended period.
When it comes to things like pet sitting,
that can easily run you $50 or more a day
in cities like New York City.
And even if your friend's doing it please stop pay your friend.
Don't make this be some weird thing where they now
feel obligated to take care of your pet for free.
Long story short, any time you are planning for
and budgeting for travel, do not forget
to include the cost of what it will
take to maintain your life when you're not there.
Number seven is wedding guest costs.
Now we were all given a brief reprieve
from this in the year of our Lord 2020.
But we all know well enough that those vaccines are coming
and we're going to end up shoved into a salmon pink
bridesmaid dress, and shelling out
$1,500 to go to some reception hall in a suburb Dallas, Texas,
to celebrate a person that we went to high school
with getting married.
It's coming back.
Yeah, so apparently, I'm being corrected here.
Texas has just been not engaging with the corona narrative
and having weddings all the same this year.
And it's arguable that for all of the weddings that
have been put off this year, you may
have more wedding obligations in 2021 than normal.
And it's not only an expense when you're actually
in the wedding in some capacity, it's
also extremely expensive just to attend a wedding.
According to a 2018 survey, guests attending weddings
spend an average of $628 between travel, clothing,
wedding gifts, hotel stays, wedding associated parties,
et cetera.
And you may already budget for the travel and gift
portion of attending weddings, but what
about the tangential costs?
Will you need an Uber or lyft to the airport,
or to or from the venues?
What about lunch if you have a few hours
to kill between a church service wedding and the reception
at a different location?
What about the late night food and a hangover breakfast
after the wedding?
It's easy to not only not account for these expenses,
it's also easy to slip into a mode of screw it.
I'm already spending the money and it's a wedding who cares.
Over budget for any given wedding.
But also if we're being honest here,
feel free to say no to more weddings.
I feel like that should be a thing that
changes after coronavirus.
You don't have to go to every wedding you're invited to.
You have other financial goals.
It's enough with these weddings.
You're not special.
What is it?
We've all been to some weddings that
were beautiful moments, where you truly
felt God's love shining through and we've all
been to weddings where you're like,
we could have done without this.
Number eight is non-recurring donations.
Many people do have a regular spot in their budget
for recurring donations.
You might be a patron of something,
you might be involved with a charity of some kind,
but the truth is especially around holiday times,
these expenses could come up as one offs
that you may not plan for.
And in the meantime, do a thorough accounting
in your budget for things that you
may have signed up for in that regard
that you don't remember about.
It's easy to sign up for recurring $5 monthly donation
to some cause or another, and then quickly forget about it.
The more we leave a dedicated portion
of our budget to being charitable and supporting
causes and organizations and people who we want to,
the less we will feel like it has
to come in conflict with the rest of our budget choices.
Number nine.
License renewals and upgrades.
Now this point is coming to you live and direct
from someone whose driver's license
has been expired since 2016.
And the funny thing about that is that even
the driver's license itself was still a provisional driver's
license, because I just drove on a provisional driver's
license for years and never actually went
through the trouble of getting my upgraded driver's license.
But the cost of renewing your license
is easy to forget because it's only something
you have to do once every several years,
depending on the type of license and where you live.
License renewals vary in cost and duration.
In New York, for example, it cost $64 for most people
and lasts for 10 years.
While in Missouri it costs for $10 but only
lasts for three years.
And also remember that you will need a real ID designated
license or an enhanced driver's license
in order to fly domestically starting in October 2021.
Passports also work.
A real ID will cost the same amount as a regular driver's
license but an enhanced license will have an additional fee.
You'll need to check out your state's DMV
website for more information.
What a racket?
There is always squeezing money out of us.
The stone is dry, we have to import blood to give.
Number 10 is alcohol spending.
For those who imbibe.
A lot of us consider alcohol as part of a food or restaurant
category, which is probably not the best
thing to do both because cost per unit on these items
can be way different.
For example, you can easily get a $20 on-trade at a restaurant
and then also spend $20 on a drink to go with it.
Really not the same thing we're working with here.
But it's good to keep in mind where
these two budgets actually land and not conflate them.
According to the Bureau of Labor statistics,
Americans spend about 1% of their gross annual income
come on alcohol.
For the average household that is $565 a year,
$5,650 in 10 years, or a whopping $22,600 over a 40 year
period.
And it's worth noting that $565 per year
breaks down to about $11 a week, in some cities that will barely
buy you one cocktail.
So it's very probable that your spending exceeds that.
But this is one area in which you may not
want to be above average.
When you consider how much your food and dining
budget is impacted by the choice to opt in or out of alcohol,
you'll realize that you could make your dining out budget
stretched way further if you decided
to take some of those trips without necessarily imbibing.
And a similar rule goes for your grocery bill.
Also we should just be drinking less.
It's not good for the skin.
It's not good for the soul.
Number 11 is ride apps.
In New York City in 2018, the average spend on Uber per month
was $84.
In LA, it was $64 and in Atlanta $56.
Now right now you may not be going a ton of places
and therefore not spending your usual amount on ride share apps
and taxi cabs, but that number is
likely to go back up as life continues to normalize.
Like with alcohol, it's important to budget for this
separately so you can analyze how much you are spending
on this item, rather than just rolling it
into transportation costs.
Because it's easy once all of these things
are conflated to just assume that your transportation
costs are consistent and on some level unavoidable.
But when you think about the outsized amount of money that's
spending on an Uber or a Lyft entails as opposed
to taking public transportation, or walking, or biking,
you quickly realize that these things are not to be conflated.
And cutting out one can have an enormous impact
on the overall budget.
Forcing yourself to separate them out and account
for it means you'll never be surprised by how much you
default to these ride shares, but also
means you will not be taking it for granted as an unavoidable
transportation cost.
Number 12 is home repairs and maintenance.
And yes, this is true even if you're renting.
Although landlords are primarily responsible for ensuring
the habitability of a rental unit,
both landlords and tenants are responsible
for certain repairs.
For instance, the landlord must perform any maintenance work
that is necessary for keeping the rental unit
livable for the tenant.
The landlord is also legally responsible for repairing
any defects and will be liable for any injuries resulting
from a defect that the landlord failed to repair
or repaired ineffectively.
However a landlord is not responsible for repairing
damages that were caused by the tenant,
or the tenants family, guests or pets.
And if you do on your home it is very important that you take
a close look at your homeowner's insurance to understand what
is and isn't under that purview
Number 13 is niche cleaning products.
We all have that all purpose spray in a roll of paper towels
covered.
But what about things beyond that?
As you get older, you realize that different things need
different cleaning products and you'll
learn it the hard way when you try
to clean stainless steel with all purpose cleaner.
Now what you will actually need will
depend on what's in your home, but a few good things
to start with are, stainless steel cleaner, granite
or marble cleaner, leather cleaner, bleach, wood floor
polish, pet stain slash odor remover, grout cleaner, mildew
remover, power washer, and likely many things in between
depending on where and how you live.
I don't know you.
Number 14 is a non-wedding / non-birthday gifts.
These are everything from thank you gifts,
to housewarming gifts, to hostess gifts,
to the new person at the office gifts, to sorry gifts,
to sympathy gifts, to--
anything in between that will just
come up throughout the year often
at times you least expect it.
Having a small dedicated budget for all of the incidental gifts
not only helps you never be surprised by those costs,
but also help you to be the person who doesn't show up
empty handed and remembers people
special moments, which will take you pretty far in life.
Lastly, number 15 is tipping.
Anyone who-- look, OK.
Beeb, beep.
Public service announcement, coming in hot.
Here's the deal.
Put down what you're doing or eating or thinking about.
If you watch TFD.
If you even dare to breathe on the TFD community or comments
section, and you do not tip at least 20%.
20% is the floor, not the ceiling, get out of here.
Get out of here.
If you cannot afford to tip, you cannot afford to utilize
the product or service.
And I understand.
You're like the system is unfair.
Why should I have to tip a server when they should just
be paid a fair wage.
I agree.
The answer to that is you should also
be advocating for a much better system and a much better
minimum wage for tipped workers.
We could phase out a tip system, but that's a policy change.
Occasionally, establishments will eliminate tipping
and compensate their workers more fairly, but outside
of that if you are going to a restaurant, for example,
and you decide it is within your budget to buy that food,
you must integrate a good tip into it.
And especially in the year of the pandemic,
when we are reliant on service workers more than ever.
That person who's crossing town in a snowstorm
to deliver your food deserves a very good tip, especially when
you consider that some of those apps
tend to cut in on those tips.
And if you're ordering something and your pre-tip total
is really low, always make your tip at least $5.
Even if you're ordering a $5 coffee,
you're paying these people for their time
and they are not fairly compensated otherwise.
Now I'm looking to you, my beloved chic, thoughtful,
always on point TFD commentariat.
To shut down anyone who tries to start a fight about how
you shouldn't have to tip 20% or you shouldn't
have to tip at all or whatever.
We're not having that debate here.
This is my house.
Get out of here if you want to have that debate.
Tip well and integrate tipping into your budget.
Or you can't afford the thing.
That's the end of that story.
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