What do I mean by grace?
Grace is what makes it ok to not be perfect.
It’s for all of those times you say, “Well, I would have made my budget this month if ______ didn’t happen.”
Lane is using a golf ball to demonstrate the new family rule:
Don’t put nuts in your nose.
Now we have a doctor bill for $100.
Jackets get lost. Books are overdue. You shouldn’t have parked there.
Wouldn’t it be nice to prevent every mistake or unforeseen event that costs you money? Those expenses you aren’t counting on might be unknown for now, but they shouldn’t be unexpected.
If every dollar in your budget is already assigned to something, then you need a perfect month to achieve your budget. It might be possible for one month or two, but it’s not realistic every month.
I mean it literally — make a line on your budget and call it Grace, or Extra, or whatever you think.
Isn’t that what an emergency fund is for?
No, let an emergency fund be for true emergencies such as a car accident or a trip to the hospital. Once you’ve made the effort to establish your emergency fund, you shouldn’t be dipping into it every month. Then you’re constantly having to build it back up. Leave it alone so it will be available when you need it the most.
How much extra buffer do you need?
It depends on your circumstances and if you have kids. We try to plan for an extra $50 or $100 a month for unknown expenses and mistakes.
If you don’t need it, great! Transfer that money into savings at the end of the month. And cut yourself some slack. Life is short.