I’m a little annoyed because I over-estimated my paycheque at my new job. As a result, I’ve had to do some last-minute adjustments to my budget. Part of it was due to uncertainty – not all of my deductions and benefits were processed until recently, for example, so my very first paycheque was inflated. Part of it was due to optimism on my part – I had apparently forgotten how many freaking taxes there are. :p After pension contributions, taxes and a myriad of other deductions, I have about 70% of my paycheque left. Bah!
Luckily, my budget is relatively unscathed. I just end up putting a little less towards debts than I would like. However, there is hope for the future! Although I am not part of a union, per se, I do belong to a professional association which is beginning a new round of negotiations with the employer. I might see a salary increase in the next few months. This “economic increase” is supposed to reflect changing market values and would not affect any regular promotions or cost-of-living increases. I’m not sure how much of an increase the association is hoping for, but I feel like 1-2% is likely.
This mini-fiasco emphasizes to me why it’s important to under-estimate your earnings and over-estimate your expenses. If I had budgeted every cent of my money and borrowed based on my earnings to the last dollar, I’d be in quite the mess right now! Instead, I willfully ignore parts of my income and inflate parts of my bills.
Suppose my paycheque was $1567 – I’d budget $1550 instead, ignoring the “change” leftover. This creates an instant buffer of $17 in my chequing account. If any unexpected charges or fees came up during the month, I’m safe. And over time, this influx of ignored money turns into a respectable chequing account buffer – protecting me from monthly fees and acting as my first line of defence in an emergency. I’ve been doing this for several years and I have about $500 of buffer in my chequing account. I’m aiming to have $1500 so that I won’t have to pay monthly bank fees! Obviously I didn’t do a very good job of under-estimating my paycheque at this new job!
Likewise, if my monthly phone bill is around $60, I would actually budget $65. This covers my ass in case some idiot decides to text me ten. short. messages. instead of one big one (true story!) or I need to be on the phone longer than usual due to an emergency or family issue (true story!). If I don’t end up using the whole $65, that extra money just sits in my chequing account, again painlessly building up a nice buffer. This part of my budget worked. :p
Thanks to over-estimating my expenses, trimming down my budget did not hurt any of my major obligations. I simply reduced my current student loan repayment from $350 to $300. This is still above the minimum payment required. It’s annoying, but if I hadn’t had that built-in buffer, it could have been a lot worse. I might have had to reduce my savings instead or cut out cable, for example. I’ve rebalanced my budget and everything looks peachy now. And, I am still hopeful that I can find some extra cash to throw at my student loan – fingers crossed!