How to pay for non-emergencies

Bucket being filledPhoto courtesy of Dwight Sipler

We know what an emergency is. It’s an incident that is both unexpected, urgent, and unavoidable (and unfortunate).

When you have an emergency, you use money from your emergency fund. (And if you have debt, here’s how you can still have an emergency fund.)

When you have situation that’s not an emergency, you don’t touch that emergency fund.

But you still need to pay for it.

But how? Here’s a guide.

Adjust your plan

We all know now that the most important way you can succeed with your finances is to understand the secret life of your money.

And that means making a plan. Telling your money where to go. Putting all your income into categories and only spending that allotted amount.

But let’s say that you have some new, non-emergency expense that’s come up. What then?

The first step is to adjust your categories.

Let’s say that you have a $100 bill that you haven’t accounted for. Is there a category you could shave $100 off of? Can you go without buying new clothes for a month? Can you have a little less fun?

Or, perhaps an easier ask, could you spread out that expense over two or more categories? If you spread $100 over five different categories, then you’d only need to spend $20 less in each of those. Could you do that?

If yes, then you’re golden.

If not, you’ll need to find the money in another place.

Use the bucket brigade

I’ve talked about separating your savings. Since that post was written, I’ve taken to calling these individual savings accounts “buckets”.

I like having different buckets for various purchases that I know are going to happen, but don’t know specifically when. My “car bucket” in particular has made my life so much easier, since car bills are so lumpy (nothing one month, hundreds of dollars the next month).

Anything that you’d have a budget category for can be a bucket. Each month, I put a little money in to my buckets (treating them as a bill, though you can choose how to treat them). The nice thing is that over time, these buckets can grow to be rather large (full).

So if you have something that’s larger than you can fit into your budget, use a bucket.

Note that these buckets are separate from your emergency fund. This is money that is earmarked for a particular purpose. Now, one could presumably use the funds from a bucket for an emergency, but that’s not their primary purpose.

This month, I had to renew my registration on my car. It was $150. That would have made my monthly budget tighter than I wanted, but luckily I had that amount in my car bucket. Problem solved.

What’s your other option?

We’ve already stated that this purchase, whatever it is, isn’t an emergency.

So what do you do if you don’t have room in your monthly budget, and you don’t have an appropriate bucket?

The answer is simple: you don’t pay for it.

Put it off. Cancel it. Don’t do it. You may want to, but you don’t have to. Because if you had to, it would be an emergency, wouldn’t it?

Start filling up those buckets

If there’s any lesson out of this, it’s that you want to create buckets for non-emergency situations.

You may not have buckets now. That’s okay; you can start small. Actually, you generally have to start small.

But you still want to start planning today. Because if you don’t plan, you’ll still have to deal with these situations, but you’ll have less optimal choices.

And when your buckets are full, and you can just pay for it, I can assure you, it’s going to feel great.

But enough about me. How do you pay for non-emergencies?

Mike Pumphrey

Mike Pumphrey

I'm the founder and author of Unlikely Radical, a site to help people succeed with money, achieve their goals, and live intentionally.

I offer a free phone consultation to anyone who is interested in changing their financial narrative. Are you ready? Click here for details.
Mike Pumphrey
Posted on September 22, 2016