Another Budget Planning Tip

Filed in archive Saving on February 22, 2010

© Rennett Stowe

When you are creating a budget, you want to plan on covering possible projected expenses, too. Primarily, this refers to inflation that occurs continuously througout the year. While some of the items within your family budget will be fixed, others will be variable because they are affected by inflation.

For your variable items, such as food, utilities, gasoline, etc., you should add to them about a 6-8% increase over the course of a year. If the inflation does not rise that much, then simply put the extra amount into a savings account on a quarterly basis.

Some years have almost no inflation, but other ones can have a rather large jump. Some items will also be affected more than others, and some will only have a raise at the end of a contract - such as a rent agreement.

Philip Brewer suggests that "For things like groceries, where the price can change at any time, apply a fractional adjustment to each month." An example of this would be to add about one to two percent every month. If one month does not increase in cost, then simply leave the money there.

Another example of budgeting money into your planning is to set aside a little extra money in the case of gasoline costs. As you have seen lately, costs at the pump can rise unexpectedly - and they can rise quite a bit. Either put an extra amount into the budget, or be sure to have some extra money set aside in case that does happen.