3 Steps to Keeping Irregular Expenses From Wrecking Your Budget

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Budgeting for expenses that come every month is tough enough. Working in those irregular expenses that come only a few times a year can be even tougher. Property taxes, car tag renewal fees, annual insurance premiums, and holiday spending are a few examples of expenses that don’t come around that often. But if you’re not prepared for them, these irregular expenses can wreck your budget. Here’s how you can keep that from happening. 

Know your irregular expenses and when they’re due.

Irregular expenses don’t have to sneak up on you. Keep a list of all the expenses you have once or twice a year, the amount, and the month you have to pay them. Refer back to the list each month so you know what’s on the horizon.

Set aside money each month for all your irregular expenses.

It can be tough to pay a big one-time expense out of a single paycheck. Rather than stress your budget in one specific month, you can spread the expense over a period of time, but you’ll have to plan for it. If you have an expense that’s only due once a year, you can divide the amount by 12 and set that amount aside each month. To prepare for annual property taxes of $1,200, for example, you’ll need to put aside an extra $100 each month. Build the savings into your budget, like all your other expenses so you’re properly planning for these expenses.

Of course, this could mean that you're setting aside a couple hundred bucks or more each month for expenses that you don't have to pay for several more months. You may want to keep that money for some "fun" speniding, but when those bills are due, you'll be glad you made the sacrifice. 

Make sure you keep these funds in a no-touch savings account. This isn’t regular savings or emergency fund that can dip into for vacations or unexpected expenses. Because it’s money for actual expenses you have coming up, you can’t afford to use this savings for anything else.

Set a reminder when these expenses are coming due.

Some expenses you know are coming up. Back-to-school and Christmas shopping, for example, are easy to remember. Stores are start advertising for these events weeks, sometimes months ahead of time. On the other hand, bills you’re not used to paying every month can catch you off guard. Set a reminder in your phone or calendar so you won’t forget and have to deal with late fees. 

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Saturday, 16 December 2017