The Power of Three! – Bucket 3 – Other Monthly Expenses

investor stallone, other monthly expenses

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Other Monthly Expenses – What is it really?

This is something that I’ve also termed as “Try to spend everything” bucket. After all the saving and planning in the previous buckets, this is a more carefree segment with maybe a pinch of planning beacause, after all, what’s in a financial  planning system without a little planning, eh?

Anything that is an ad hoc purchase like a fashionable piece of clothing, a fancy new electronic item, tickets to the latest movie, a night out with friends at the pub (remember to split the bill ;-P ) etc. can be funded via the amount which is in this bucket.

I’ve also termed this as the “Try to spend everything” bucket.

These so called “Other Monthly Expenses” are just miscellaneous items that you spend towards in a month and yet, these expenditures play a vital role in your life. This money goes towards a very important personal investment, your happiness. While peace of mind maybe priceless, indulging in a bit of harmless entertainment doesn’t hurt anyone. Having a positive frame of mind while one is pursuing one’s dream is quite essential and this money contributes to that. Earmarking a sum towards this “Happiness Fund” may seem a little difficult in the beginning, yet like the other buckets, practice will make you not only perfect, but also happy.  Once a regular cadence is established, one’ll soon realise that while this planning might seem superficial esp. such an effort spent towards planning their “Savings Bucket” and “Fixed Monthly Expense Bucket”, and yet, to balance out that very stress of missing out on the pleasure of the present, one needs to have this. 

But, I am left with Peanuts, How do I plan for the Expensive things I want?

Plan” is the big operating word in this case. This situation will be especially true in the early stages of your career when budgetary constraints will leave very little wriggle room for you to operate. In these situations, a lot of individuals are tempted to move into the “debt trap” of easy loans and high interests offered by EMI schemes and credit cards. I use a strong word like “trap” as once the individual uses these, getting back on the regular rhythm of disciplined saving will seem much harder. There are, however, benefits and clever uses for these instruments and that will be a post for another day. For now, consider avoiding that and, when you really want an expensive purchase, try to save in the same rhythm as you’d pay for an EMI over a maximum period of 3 months and no more. I have found that prolonging the saving period also tends to put a dampener on the pleasure of the purchase. Needless to say, considering the savvy customers of the day, that one should also consider dates when the items may be available at a bargain within that 3-month limit. Needless to say, for the previous suggestion, since there is no interest to pay, if the amount takes more than 3 months to accrue, I’d reconsider the purchase for the time being.