in the past, i’ve bought things like a mountain bike for $2,500, a canoe for $1,500, and a truck for $4,000. these don’t exactly fit neatly into a monthly budget, but if i spread out the cost over a year, it gives me a more accurate view of my spending, so i haven’t really seen an issue.
now, i’m thinking of buying a $12,000 truck in cash, and i’m not sure how to record it. putting it in the same place as, say, an $80 pair of shoes feels off. anyone got ideas on how to track a bigger purchase like this?
i have a separate account for stuff like this where i put money aside each paycheck. along with regular accounts like checking, savings, and retirement, i’ve got one called ‘fun stuff.’ anything that’s a ‘want’ rather than a ‘need’ goes here, whether it’s a $1,500 canoe or a big vacation. usually put about 5% of my pay in there, but it fluctuates based on what’s left over after essentials.
to handle big purchases, you’ll want two views: your bank accounts and your budget categories.
in the past, people used envelopes for budgeting – groceries, gas, vacation, truck savings, etc. some envelopes were for monthly expenses, while others were for sinking funds (things like vacation or a new truck).
these days, it’s all digital. you can use a spreadsheet or budgeting software to track ‘envelopes’ or categories. some budgeting software like ynab does this and gives you a clear view of what each dollar is set aside for.
once it’s set up, you’ll see both your bank account balances and each category, like groceries, truck savings, vacation fund, etc. you end up making big purchases feel like regular monthly expenses, which helps keep things balanced.
i track my monthly recurring expenses separately, then have a yearly total that includes one-off purchases. i don’t categorize these any further since i can just look at the total each year to see if my spending is going up or down.
i keep a spreadsheet where each month i log the ending balance of my bank and investment accounts. if i make a big purchase, i add a note for that month explaining why the balance dropped a lot. this way, i can go back and see when and why i made those big purchases.