Effectively managing the Miscellaneous Category

Many of you keep a budget or a spending plan; or at least I hope you do.  Some keep it pretty strictly and others maybe not so much.  I hope this works as a guide to your financial life to keep you focused on your financial goals.  One item that you may have in your spending plan is the miscellaneous category.  Depending on how you manage the miscellaneous budget could be the difference between staying under budget or not.  The question I would ask is what is the purpose of your miscellaneous category?

Some may have a miscellaneous budget item to throw everything in there that they don't have another category for or if they've overspent on other budget items this may give them an excuse to say, "I'll throw it in  miscellaneous.". This allows them to get what they want now instead now and not have to wait.  So instead of being patient, saving up for the item, and purchasing the item they buy it now, put it on a credit card, and start paying interest on the item.

Does this sound like some of you?  Here are some tips to help you keep track of your miscellaneous spending and staying under budget

• Make sure you fund the miscellaneous budget - Make sure you don't get to the end of your money for the pay period and want to purchase something and say, "I'll put that under the miscellaneous budget" if you haven't funded it adequately.  You'll go over your budget.
  
• Keep track of what you are using your miscellaneous budget for - The key to keeping a budget intact is to keep it intact.  Keep track of what you're putting in your miscellaneous budget.   There are items that should have their own budget item.  For example, recreation or eating out should have their own category.

• Make sure you balance your miscellaneous expenses and retirement preparation - Just because you have extra money in your budget don't increase your budget by all of it.  Keep your retirement accounts in view and establish a regular contribution into a retirement account.  If your company has a matching program make sure you are contributing to it.  That's free money!
• Some use the miscellaneous budget item for unexpected expenses - it's really comforting to have an item with which you can place unexpected expenses, for example, the car needs repaired, you have to take an extra trip out of town, or your dryer goes on the fritz.  Once again, the key is to keep it funded by putting a percentage of your budget into this item each month.

• The Miscellaneous budget adds flexibility to your budget - While cutting a miscellaneous budget, or moving its spending to more clearly defined categories, can help achieve financial stability and better spending analysis, miscellaneous budgets are also useful for increasing flexibility. If your income rises and you have no need to increase the amount of money you save each month, you could reduce savings as a percentage of income and devote the additional percentage to miscellaneous spending. This leaves room for covering overages in other areas of the budget and creates the freedom to make occasional purchases without special planning.
  http://wiki.fool.com/Percentage_of_Income_and_Miscellaneous_Budget
   
• Keep your eye on the budget amount so you don't go over - Whether you're talking about the miscellaneous, grocery, or eating out budget item keep a cell or a location for how much is remaining in that item.  This will help you manage your spending especially towards the end of the pay period.