You’re going along great in the month and then BAM! You get hit with a big car insurance bill due in a few weeks that you totally forgot about. Is it already time to renew?
© Kaspars Grinvalds / Dollar Photo Club
Does this happen to you a lot with car insurance and other non-monthly expenses throughout the year? It can be a pain to try and come up with a large payment on top of all the other bills you normally pay in a month.
For the most part, you can plan ahead for these irregular expenses or non-monthly expenses as they are sometimes called.
How to Plan Ahead for Irregular Expenses
First, write down all the expenses that you might have throughout the year that do not happen on a monthly basis. Here’s a list of all the expenses I could think of:
- Car insurance – twice a year
- Vacations – once a year
- Babies – once every few years
- Christmas – once a year
- Birthdays, Anniversaries, weddings, etc. – several times throughout the year
- Property taxes – once a year
- Car registration – once a year
- Warehouse club memberships – once a year
- School supplies – once or twice a year
- Lawn care – varies
- Tires – maybe once a year
- Major car repair – maybe once a year
- Dentist (root canal or major work) – hopefully not once a year, but possibly
- School (college) – 2 or 3 times a year
- Propane – once a year
- Trash removal – varies
- Pest control – 2 or 4 times a year
- Household repairs/maintenance – varies
- Activities for child – varies
For us, trash removal and property taxes are both expenses that we pay each month. Our property taxes are rolled into our mortgage so we pay a portion each month.
Also, some expenses like car insurance can be paid monthly, if you choose, but then you do end up paying more money in the end.
Once you know your family’s own unique expenses (you may have more or less than the examples above), write down the amount for each one that you normally pay each time and then figure out how much that is each year. Take that yearly amount and divide it by 12 and add that amount to your monthly budget.
Example:
Car insurance – $1,200/12=($100.00)
Christmas – $300/12=($25.00)
Tires – $400/12=($33.33)
Car registration – $140/12=($11.67)
Birthdays, anniversaries, weddings, etc. – $345/12=($28.75)
Just to be on the safe side, round these numbers up. For example, tires could be rounded up to $34 or $35, car registration to $12 or $15, and birthdays to $29 or $30.
Each month when you are doing your budget, take that money out at the BEGINNING of the month when you receive your first paycheck, as if you are going to make a payment, and put it into your savings. This is when multiple savings accounts would come in handy. Keep track of the money that you have put into your savings in a spreadsheet with each expense getting its own tab.
Do not wait until the end of the month after you have spent all your money to try and set these amounts aside. They should be treated just like your other monthly bills!
I would recommend that you only take the money out of your account and keep it in cash if you are absolutely certain that you will not lose that cash. It would be a major disappointment to save for your $500 semi-annual car payment and not be able to find the cash when it’s time to pay it!
The greatest part of putting these irregular expenses into your monthly budget is that when one of these expenses pops up you will have the money already saved and ready to go!
What irregular expenses do you usually forget about?
The big one for us is the car registration. Thankfully they’re space out enough that it’s not a huge hit all at one time. And yes, Christmas! I start shopping in August, especially for the ones where I plan to give money (I put money away for my niece and nephew in the bank).
That’s really smart to think ahead for Christmas. Even though we don’t spend a lot, it can still add up, especially when you host Christmas Eve dinner!
We are bad about remembering to include a Christmas fund. We usually just use our savings for everything but it would be nice to plan ahead this year!
That’s great you have a good enough savings to pull money from it for Christmas!