Finances can be affected in a big way when you experience a healthcare crisis. The costs of living with a chronic disease can be even greater because the costs can persist for a long time. You may spend money on doctor visits, prescription medicines, or equipment. Insurance may cover some of those expenses. But many people still pay co-pays or have deductibles.
In addition, you may spend extra money on things that aren’t covered by insurance. For example, many medical facilities charge for parking. You may pay for someone to come help you inside your home. Massage, acupuncture, or personal training are examples of alternative treatments. These are not covered by insurance either. So, the costs of living with a chronic disease or illness can add up quickly.
Budgeting: One Tool to Control the Costs of Living with a Chronic Disease
How can you get on solid financial ground and control the costs of living with a chronic disease or illness? Creating a budget, or adjusting one that you already use, is one of the first steps you can take.
There are three basic steps to creating a budget.
1. Record your monthly income
2. Estimate your monthly expenses
3. Record your transactions
Sounds simple, right? Unfortunately, it’s only that simple if you bring in enough income each month to cover all your expenses.
Allow me to share with you lessons I have learned from years of budgeting. I started budgeting 20 years ago. I created an excel spreadsheet on my computer. Each Sunday I would sit down and enter my spending for the week. This meant I had to review my checking account and credit card transactions and make sure all expenses were recorded. It took about an hour each week. And to be honest, I didn’t always check my budget every week. As you might guess, I was prone to overspend when I didn’t keep up with my budget.
Use Technology to Make Budgeting Easier
Then, about 3 years ago, someone recommended using an app for my phone to budget. (I use the Every Dollar app, but there are many options.)
I didn’t expect that using my phone to budget would be much different from using my excel spreadsheet. But I was wrong. The phone app has made following my expenses much easier than I ever anticipated.
First, I record my expenses as they happen. I no longer wait until the weekend to record where I have spent money. This, in turn, guarantees that I am looking at my budget every day. Not obsessing over my money. But glancing at it frequently so I know, well before the end of the month, if I am managing my finances well. Now I know if I am close to overspending instead of realizing I had overspent.
Second, budgeting on my phone makes it easy to adjust my finaces month by month. For example, I usually budget $100 for gas for my car each month. Some months, I don’t spend that much. I may have $20-25 dollars left over at the end of the month. The app makes it very easy for me to notice that ahead of time. So, I can reduce my gas budget before the month ends. Then, I put that extra money towards another category where I am on the verge of overspending.
Getting Started with a Budget
So, how do you actually start a budget?
Start by writing down all your sources of monthly income. Do you earn money from a job, social security, retirement investments, property rentals?
Then, record your monthly expenses. Consider the following categories when creating your budget:
- housing. This includes your rent, mortgage, or home owners association dues
- utility bills. Water, electricity, natural gas, sewer or garbage bills are included in this category.
- transportation. Do you have a car payment? Insurance for your car? How much do you usually spend on gas? If you use mass transit, how much does that cost each month?
- food. What is your monthly grocery store bill?
- clothing. Think about clothes you buy for yourself, as well as other members of your family. For instance, children.
- healthcare. Do you have co-pays or a deductible you must meet with your insurance plan? Do you usually have to pay parking fees at the doctors’ offices you visit?
- entertainment. What do you do for fun? Think eating out or going to the movies.
- childcare or adult care. Are you paying for someone to care for children or a sick family member?
- cell phone, internet or cable. What do you spend each month on your cell phone bill, internet company and television viewing?
- loans like school debt.
- memberships. Think about gym memberships, magazines you receive, clubs you belong to, or a Netflix subscription.
- insurance. Many of us make monthly payments for life insurance, insurance on our cars and homes.
- pet care. How often do you take your pet to the veterinarian, buy food or medications?
- gifts. Think about birthdays, anniversaries, and other celebrations where you usually buy gifts.
Don’t forget any other areas of debt not listed here.
Warning – Watch out for Miscellaneous Spending!
In my budget, I also include a category called miscellaneous. This category includes my discretionary spending – things that I want, but don’t need. For example, most of my purchases from Amazon, like books, are a want and not a need. Or if I treat myself to lunch at a restaurant, it’s something I want to do, but don’t need to do.
If I am not careful, this is the category where I have the most potential to overspend. Most of the other categories in my budget are set. For instance, I know what my mortgage payment will be from one month to the next. But discretionary spending is more difficult to predict. It’s the category I watch the most as I get towards the end of the month. When I want to buy something, I check my miscellaneous balance and make sure I have the money. If not, I wait until the following month to buy.
More Tips for Budgeting
Here are some more tips I have learned after years of budgeting.
1. Find what works best for you to keep up with your budget on a day to day basis. If you are savvy with your phone, find an app. If you prefer pencil and paper, keep your budget in an accessible place so you can update it regularly. Collect any receipts and enter them at the end of the day. The key is to check on your budget and your spending frequently. If you wait too long to enter expenses, you may find that you have overspent.
2. Sometimes even set expenses are not the same from month to month. This lesson took me a while to learn. If I created a monthly budget for January, I eventually realized that same budget didn’t work for every month of the year. For example, when my children were in daycare, I made weekly payments to the daycare center every Monday. Most months have 4 Mondays, as you might expect. So I budgeted for 4 weekly payments per month. But each year, there are are 4 or 5 months that have five Mondays. In those months, I paid an extra week of daycare expenses. When I had two children to pay for, that meant at least $400 extra dollars in daycare expenses that month. Where did that extra money come from? My miscellaneous spending. I learned that in those months I couldn’t spend as much on things I wanted.
3. Think about what months may have more discretionary expenses than other months. For example, May and August are expensive months for me. I spend more money on things related to school. May is the end of the school year. So, I spend money on gifts for each teacher and end of year celebrations. When I had three kids in elementary school, I sometimes had 6-7 teachers to buy for. August is also expensive. I have to buy school supplies, pay school registration fees, and buy new clothes and shoes. As you prepare your budget, consider the months that might have extra costs. Try to estimate ahead of time and make sure your budget reflects those expenses.
If you haven’t budgeted before, give yourself a few months to practice and make perfect. Like any new skill, it takes time to get budgeting right.
If you find that your budget expenses are more than your income, you have two options. Increase your income or prioritize expenses. Are there ways you can increase the money you bring in each month? Or, can you trim expenses? Consider those things that are necessary in your budget. Then, make sure those items are covered first. For example, paying your mortgage or rent might be the highest priority. Then, consider what discretionary spending you can give up, at least for now. For instance, reducing a cable bill might be an area to save money.
Costs can add up when managing a chronic illness or disease. Sometimes we can feel defeated or hopeless when our finances are out of control. But budgeting is a tool that can help you gain control. It is a small but vital step to improving your quality of life when living with a chronic condition. Check out more resources for living with a chronic disease or illness at The Chronic Wellness Coach.
Disclaimer: This blog is a resource through which you may obtain information regarding your health and wellness. Information is intended for the general reader and is not a substitute for medical advice. The content in this blog is intended to be informational only and not interpreted as specific advice for you. There may be delays, omissions, or inaccuracies in information contained in this blog. You should always consult with a licensed healthcare professional who is familiar with your health and past medical history before making any changes you may read about in this blog.