Estimating income and bills

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!

Photo Credit: http://www.flickr.com/photos/twon/

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!

Posted in: Money

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