Photo Credit: Dawn Armfield
Learning to budget is an important first step in financial management. A budget helps you manage your spending habits and set and reach goals. Without my budget, I’d be lost.
But it’s not always important to stick to a budget. In fact, there are a few instances where sticking to your budget doesn’t make sense. Sometimes, you just need to throw your budget out the window and focus on the issue at hand. Here are four situations where it’s ok to ditch your budget:
After a Car Accident
If you’ve ever been in a serious car accident, you know that it can be traumatizing. If you’re injured, then you’ll need to go to the hospital, and there will be follow up appointments. If you get in a car accident away from home, you’ll have hotel costs and meals to worry about.
Right after a car accident is not the time to be fretting about your budget. Just forget about your budget, and do what needs to be done. Book that hotel, buy that meal out and worry about more important things, like whether you got the names of your doctors and witnesses written down for your insurance company.
Earlier this month I was floored by a cold. I don’t usually take sick days for anything other than headaches, but this cold claimed two. I was so, so sick. Instead of worrying about staying on budget, I went to the drug store and bought about five different types of cold medicine, and then went to the grocery store and filled my cart with chicken soup. Did I go over budget that week? Yes, but I don’t care. The most important thing at the time was to feel better, and I did what I had to do.
After a Death in the Family
When someone in your family dies, the last thing you should be worrying about is money. Just book that flight home, don’t worry about the cost, and be with your family during this difficult time. Since flights can be expensive, it would be helpful if you had an emergency fund to draw upon for this. But even if you don’t, money is not what you should be worrying about right now.
After a Natural Disaster
This sounds like a far-fetched example, but as the residents of Fort McMurray can attest, this does happen. Forest fires and flooding are becoming more and more common in Canada and the USA, and if you find yourself in a situation where you have to evacuate from your home, your budget should be the last thing on your mind. Instead, focus on getting your whole family away from the danger zone safely, and if you need to spend money on hotels and meals out in the process – just do it.
Forgetting About Your Budget is Easier with an Emergency Fund
All of these situations qualify as emergencies in my opinion. In all of these situations, you would be justified in drawing from your emergency fund to make ends meet and cover the costs of flights, hotels, meals out and medication for a severe bout of sickness. But you can’t draw on your emergency fund if you don’t have one, which is why it is so important to have three to six months of living expenses saved up.
By having this money in the bank, you can truly ditch your budget and not worry about interest charges or how you are going to pay back your credit card because you already have the cash on hand to deal with the expense.
I’ve been living on a budget for nearly five years now, and I love it. But, there are a few situations like the ones I’ve outlined above where I’ve definitely ditched my budget and just focused on the emergency situation at hand.
In particular, when I totalled my husband’s car five years ago. We had just begun budgeting a few months before and had saved up about $200 in our emergency fund, when a van pulled out on the highway, right into our car. I had to go to the hospital for a broken wrist (to the tune of $500) and we had to stay overnight in a city that was not our home. Instead of worrying about the cost, we drained our teeny tiny emergency fund and made it work.
Being in one of the situations I mentioned above is stressful for a lot of reasons, but you don’t need to add money to that list.
Have you ever ditched your budget in an emergency situation? I want to know!