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Do you find you have more month than money? Your Irregular Expenses may be to blame.
Have you ever heard the saying “Make a monthly budget and stick to it”? Sounds easy enough right?
I have to share with you that I’ve set up many monthly budgets that I thought were perfect. I swore at the beginning of the month that my budget covered every possible expense only to end up shuffling money around at the end of the month.
After a lot of trial and error, I’ve finally figured out a great way to plan for even the smallest reoccurring expenses in our budget. It’s not complicated and has made my life a heck of a lot easier.
If you’ve been pulling your hair out trying to stay on budget every month, I’d like to share with you how we got back on track.
What are Irregular Expenses?
Irregular Expenses are reoccurring expenses in your budget that are due twice a year, quarterly or even once a year. In our budget, these are things like car insurance or the water bill that’s due quarterly. They can also be things like ink for the printer or water filters that gets replaced three or four times a year.
Managing Irregular Expenses in 3 Easy Steps:
Start by making a big list of all of the Irregular Expenses you encountered from the previous year. So you don’t miss anything, I recommend pulling out last years debit or credit card statements.
Basically you’ll want to find all reoccurring expenses from furnace filters to car registration fees. Write them all down and the cost per year. For example, if you pay your car insurance bill quarterly and that payment is $150, then the yearly cost would be $600.
Once you’re done making your list, add up all of the expenses…and yes, it will probably be a big eye-popping number! Don’t worry, keep reading on to step 3.
Divide the big eye-popping number by 12. This is how much you will need to set aside in a savings account every month. Set the money aside and don’t use it for anything that is not on the list you just made! Keep your list so you can revisit it and adjust the amount higher or lower for the next year.
Having a savings account to cover Irregular Expenses has simplified the budgeting process in our house. It’s also taken the stress out of budgeting and has kept us from dipping into our emergency fund or charging on credit cards.
I hope this little budgeting tip helps you. If you have questions or want to share a budgeting tip, let me know in the comment section below. I’d love to hear from you.
Disclaimer: Planning for Irregular Expenses is only one small part of our family’s budget. There’s long term savings, short term saving and fixed monthly expenses that impact our budget too. I am not a professional financial planner or certified financial advisor… just a mom who takes care of our family’s finances. These are my personal opinions on what works for our family. What works for us may not work for you or your situation. Please seek financial advice from a professional financial advisor who can assess your personal situation.