A comment from a coworker made me realise I've been deluding myself about money for years

When a coworker mentioned she wanted to start tracking her expenses more carefully,
I was happy to share the budget template I created a few years back (we get pretty crazy here at Business Insider).
Cut to 24 hours later, as she was entering expenses into the 60-or-so designated categories in Google Sheets and bemoaning the fact that she had already spent more than planned this month, thanks to an annual renter’s insurance payment.

“There’s always something,” I commiserated, and went back to my work.

Then I realised: There is always something. For ages, I’d paged through the record of my spending with a “but” mindset. “My spending is higher than expected … but I had that wedding shower. But I spent that weekend away. But we did that reunion dinner out.”

These aren’t emergencies by any stretch of the imagination, so the emergency fund is strictly off-limits. And they aren’t huge surprises, as I know when I’ve planned a weekend away or when a friend is getting married. But they also aren’t consistent, planned expenses like my mortgage payment, cable bill, or groceries — and yes, the amount spent on groceries varies somewhat, but I know I’ll need some every month without fail.

Let’s go through this year so far. January: miscellaneous fees related to buying an apartment. February: a weekend in the sun with friends. March: messed up my transition into a commuter rail pass and paid for it twice over. April: contact lenses for the next six months.

Each of those cost me a few hundred dollars, and that’s not even counting the “unexpected” wedding, shower, thank you, or baby gifts I’ve come to plan on buying each month. (I’m 28 — it comes with the territory.)

I’d love to tell you I’ve developed a brilliant system to accommodate these costs … but I haven’t, other than leaving a cushion in my checking account. Luckily, I’m not the only one who’s recognised this challenge (just the last, apparently).

Ramit Sethi, author of “I Will Teach You to Be Rich,” suggests one solution: designating a sub-savings account for non-emergency, unplanned expenses.

His rule of thumb is to add 15% to your estimate of your fixed costs to cover the surprise expenses, reports Business Insider’s Kathleen Elkins, starting with $50 each month.

Sethi writes:

You’ll soon realise that this cartoonishly low figure [$50/month] is not enough. But with some time, you’ll have a better idea of what the figure should actually be and can change the amount accordingly … After about a year or two (remember, think long term), you’ll have a very accurate understanding of how to project. The beginning is the hard part, but it only gets easier.

Granted, this approach — and really, any approach that doesn’t rely on abusing credit cards — assumes you have the extra cash to set aside, and that isn’t the case for everyone. A 2015 report from the Federal Reserve found nearly half of Americans wouldn’t be able to afford an unexpected $400 expense, which means they’re ill-equipped for any surprise, much less an expensive emergency.

Everyone has different expenses and varied amounts of foresight. But here’s something we probably all have in common: Unplanned expenses are a given. To best manage our money, we need to expect the unexpected best we can, even if that just means holding on to an extra $50 (or, let’s be honest, $300) a month.

There’s always something.

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