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The Different Types Of Expenses Your Budget Needs To Consider

A solid budget that considers the necessary expenditure amidst the daily incidentals is more critical than ever. Amidst rising costs of living, budgeting could be the difference between living comfortably and living pay cheque to pay cheque.

But how do you account for these expenses? How are you to map out your spending?

Dividing your budget into the types of expenses that may account for your living expenses (the type of essential spending that takes up the bulk of your monthly expenditure). These may include home expenses, costs of basic necessities, transport expenses

Home Expenses

  1. Home expenses. These costs include mortgages, property taxes, rent and home insurance.
  2. Costs that make your home “liveable”. Consider utility bills and waste removal service fees.
  3. Home maintenance fees. Think of the costs associated with repairing a roof, maintaining a lawn or fixing your heating system.

Cost Of Basic Necessities

  1. Food expenses. Factor in the amount you spend on groceries rather than eating out.
  2. Living necessities. Think vitamins, toiletries, cleaning tools and first aid supplies.
  3. Basic clothing expenses. Consider what you spend on work attire, pyjamas, daily wear and gym clothes. This doesn’t include branded goods, jewellery or statement pieces.

Transport Expenses

  • Transport and maintenance costs. This includes car rental bills, car loan repayments, petrol money, public transport fares, Uber costs and bike maintenance fees.

Healthcare Payments

  • Long-term medication. Factor in the cost of long-term medication including blood pressure medication, cholesterol medication and birth control pills.
  • One-time illness fees. Think of the cost of over-the-counter medication and the cost of visiting the doctor.
  • Emergency costs. This includes setting aside money to cover accident-related injuries, broken bones or conditions specific to your medical situation.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

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I have been consulting J L Noller and Co. (more specifically Jane) for six years and during this time I have found her to be professional, efficient and easy to discuss all accounting and taxation matters with. Her office team are all polite and friendly also.

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I have used Jane & the team for the last 6 years for all of my business & personal accounting needs. They have always been professional, easy to talk to & available when we have needed assistance.

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Carl Gillmore Landscape

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier