I get into trouble because of my inability to think about the future. Rule 1 may be all about the present. But Rule 2 is about keeping the future from kicking you in the face.
For me as a singer, November is audition month. It requires multiple trips to New York, application fees, accompanist fees, accommodation, airfare, and all the drinks that one needs after every audition. It’s a huge cost. I know that, and yet somehow every year it comes out of nowhere.
Rule 2 is all about setting yourself up for the expected costs. Early in the year I’ll write down some numbers
- Travel – $400
- Accommodation – $200 (thank you friends couches)
- Accompanists – $300
- Application Fees – $100
- Drinks – $120 (remember, budgeted expenses mean guilt free spending)
Okay. So that’s a significant amount of money. But if you put away 100 bucks a month starting in January, all of a sudden you have a thousand dollars sitting there ready for audition season, and one less thing to stress about.
This works for anything. Car payments. Accountant fees. Union Dues. I’ve been using it for Christmas the last 3 years, and it sure makes that season more fun.
Rule two forces you to break down what YNAB calls your “True Expenses”. Basically it keeps you from getting blindsided by the thing you knew was coming.
In this crazy life of SMALL BUSINESS OWNERSHIP (yup, that’s you) there will always be things that come out of nowhere. But there are lots of things that you do know are coming. Ignoring them does not make them go away. Start planning ahead, with five dollars here, and fifteen dollars there. Small amounts make it manageable to make big changes.
How you’ll feel after living the ‘Rule 2’ life.
You won’t be blindsided by big costs (at least non EMERGENCY ones). When a big bill comes up, you’ll look over at your budget and see the money all ready to jump into action.
Bill paid… and you don’t even have to eat beans and rice all month.