I preach a lot about cutting expenses while budgeting and paying off debt, but there are a few things we are not willing to scratch. Sometimes the short-term benefit of cutting that cost will be more expensive in the long-term. Other times, the money is for a passion of yours and you are determined to make it work. Then there are those moments when we all just need a little something for ourselves. Whether it’s a long-term savings issue, a heart issue, or a sanity issue, we all have our things that we just need to keep in the budget.
Chris and I truly believe that 1/10 of our income is to be given back to God and we tithe regularly at our local church. We did this when we had little and we do it now that we have more. This was a non-negotiable aspect of our budget and we have not regretted that decision.
No one plans to need insurance. That’s the point. It’s there for the worst-case scenarios. Let’s discuss some common types of insurance:
Liability is required by law. Whether or not to purchase Comp/Collision insurance depends on the worth of your vehicle. If it’s going to cost you more for the insurance than the value of your car, skip it. Otherwise, keep it insured.
This has become a massive monthly expense for families and I recognize that. If you can get it as an employee benefit, great. If that’s not an option for you and you can’t afford a commercial insurance plan, look into the medical cost sharing plans. Do what you can afford. As a Physician Assistant, I often see the devastating effects on finances that can come with medical costs for the uninsured.
This one is kind of dependent upon your life stage. Again, if offered by an employer, go for it. If you’re young and unattached without dependents or debt, you might want to skip it or have a small policy to cover funeral expenses. Chris and I opted not to get life insurance until we had a child. We had enough in savings to cover a funeral if tragedy struck and we were both able to work and provide for ourselves if we were windowed. Having a newborn changed things. Now we are planning for the cost of raising a child and helping her through college along with any other children we have. We also plan to purchase a house reasonably soon. Our next few decades will likely be the most expensive in our lives. If one of us died, that would leave the other in a struggle financially (and emotionally, but we have to remain objective for the sake of this conversation). Chris and I each have a term life policy to cover us during this season.
Government assistance in the case of disability is extremely difficult to get and the process may take months to years. In other words, don’t count on that. Most long-term policies kick in at 3-6 months of disability. This is where that magic number in your Emergency Fund originated. I want you to have 6 months of living expenses saved in your Emergency Fund (see the post on How to Budget your Savings) so that you can make it until this policy starts. If you have that, there is no need for a Short Term Disability policy.
Again, this one is negotiable. Read the policy carefully before purchasing as there are often many procedures that are not covered. There is also usually a deductible and a relatively low maximum on the policy. If you’re a boxer or are prone to cavities, it’s probably worth it. If you just go twice a year to get your teeth cleaned, it may not be a great deal for you.
Rental insurance is dirt cheap so we have always had that. We are not homeowners so we have not had to blaze that trail quite yet. Right now, much of my county is flooded from the recent hurricane and the value of homeowner’s insurance has become abundantly clear. This degree of flooding is rare in our area, but we have unfortunately had the perfect recipe of a wet summer and hurricane rain to produce terrible flooding. It would have been easy for people to take the gamble and forego flood insurance. Please don’t do that. The devastation of losing your home is enough- have it insured properly. Prepare for the unpredictable and be insured against the worst.
3. Dental/Medical Care
Prevention is much less expensive than disease treatment. Don’t skip your routine and preventative office visits. If you have a commercial health insurance policy, your annual physical is usually covered 100%. That gives you no good excuse to skip it. Keeping yourself healthy is an important way to provide for your family long term.
4. Small Gifts
I like to give and receive thoughtful gifts for occasions and sometimes for no occasion at all. These usually aren’t big expenses, but flowers, chocolates, or a specialty coffee to brighten someone’s day is worth it. My husband struggled with this a lot when we first got married because he knew how serious I was about our budget, but he also knew that I loved receiving unexpected gifts. That put him in a lose-lose situation and we had to have an open conversation about it. We decided that things like a cheap bouquet of grocery store flowers, a specialty coffee, or some Dove chocolates every now and then are acceptable in our budget. If gifts are important to you or your spouse, you may need to have a similar conversation and fit this one in the budget.
5. Car Maintenance
Much like keeping yourself healthy to avoid major expenses, you need to maintain your vehicle. Putting off an inexpensive brake pad replacement until you need to replace the rotors as well (not that I have ever done this, ahem) doesn’t save you a dime. Keep your tires properly inflated to maximize your gas mileage. Have your oil changed regularly or, even better, do it yourself (I don’t know how to do it myself yet)! Clean and wax the sucker every now and then to keep it from rusting. This is one of your more expensive possessions and it deserves a little TLC. We want the vehicles to last as long as possible. Keep your car in shape and it will save you a lot of money long term.
6. Giving to Others
There will always be someone whose situation is worse than yours. Help them. Don’t let your saving goals keep you from being generous. If you have to put off your goal another month to help your coworker through a rough patch, it will be okay. Exercise wisdom with this, but don’t be afraid to give because of how it may affect you. God has a funny way of working out these things. If you have a cause near and dear to your heart, make room for it in the budget.
7. Rare Guilty Pleasures
Please note that I say “rare.” If they are common, they start to lose their appeal. I used to get an iced coffee from Starbucks once every three months or so. After I finished graduate school and started my first career job, I started going a few times a week and suddenly it wasn’t a treat anymore. It didn’t hold the same reward-like feeling that it had when it was an infrequent purchase. Another guilty pleasure for me is a massage. I can’t imagine this one losing its appeal if it became more frequent, but it probably would as well (aside from the fact that this is much more expensive than coffee). Purchasing a little something for yourself every now and then has the power to change your attitude for the whole day and that’s worth the expense. Treat yo’self (on occasion)!
Budgeting is hard, but it’s also flexible. You have the power to choose where your money goes. If you want to spend some of it this month on a charitable donation instead of putting it towards your next vacation, that’s your call. If you want a manicure before your friend’s wedding instead of eating out, go for it. You have the ability to move funds from one category to another. If you’re intentional with your spending, you can accommodate the expenses that are important to you. What are the non-negotiables in your budget?
Don’t forget to get your free printable budget forms here!