Budget Sense

When creating your budget, and assuming you have a car, one important item is your gas spending. With gas prices always on the rise-with the rare exceptions here and there-it is important to have a good idea of how much money you need to allocate to filling your car.

Fixed or Flexible amount?

Should you allocate a fixed amount in your budget for gas or should it change, after all, our driving may change depending on the day and week etc. Personally speaking, I have set a fixed amount but you may want to do it differently. You can experiment with both until you have a good idea of how much you need per cycle (cycle is how often you get paid or how you have planned your budget) The good thing about a fixed amount is that you force yourself to drive within that limit and not waste money on any unnecessary trips. Conversely, when your budget cycle is over, you may find that you have leftover from your gas money which you can roll-over to your next budget cycle or simply move them to your savings.

Given the reality of our world today, gas prices will only go up, so it is important to be well-aware of how much you are spending on it. In fact, gas could be that one item which is sucking most of your money and leading you to ask “where did all my money go?” By budgeting for it, gas price fluctuations will not impact you a lot, and you will be ready for any price shocks.

I have been allocating a certain fixed amount (revised every few months) on my budget for gas purchases and I can confidently say that it has made a huge difference. In addition to saving me lots of money, it has helped my budget overall. If I don’t allocate a fixed amount for gas – enough to drive for work and pleasure – it means that I am spending blindly and end up spending more than I should, which will impact other items in my budget.

Of course, you will have cycles or weeks where the allocated money is just not enough. What do you do then? Do you stop driving? In situations like these, and I have experienced them myself, you have to use another item in your budget to draw money from to allocate to buying gas. This could be from your ‘Personal Spending’ , ‘Emergency’, or maybe another flexible category you have which could have excess money for that week.

Even if you have set a fixed amount on your budget for gas, you can still save even more money. In other words, you don’t have to spend every penny allocated to gas. You will go through some cycles where you end up with leftover, which is always nice. To achieve this, you will have to do a bunch of things, including less driving, smarter and more efficient trips, taking public transit when possible, combine multiple trips into one and so on. And of course, there are other things you can do to your car to ensure better fuel mileage. Click here for some tips.