One area of budgeting that always seems to be difficult to plan for is moderate purchases.  Not quite large enough to be considered a major purchase, a moderate purchase may be a new computer, television, gym membership, camera, or any other item in that price range.  It isn’t appropriate for your emergency fund, and is likely not included in your monthly budget.  So, how can you answer the question - “can we afford it?”.

My answer to that is to have a category in your monthly budget called “moderate purchases”.  You should budget for that just as you would any budget category, but instead of spending it, you should put it aside in your checking or savings account, and track the balance offline (in Excel or even a budget notebook).  When it’s time to think about buying something new, look at that balance, and decide if that is what you want to spend the money on.  This is a great way to make sure you absolutely know if you can afford it, and to avoid using credit cards for this type of purchase.

How do you plan for moderate purchases?