Have you ever prepared a budget and faithfully followed it only to have it crushed in the middle of the month because of an expense you forgot about? Does Christmas seem to creep up on you every year? Have you had to suddenly replace the tires on your car? Chances are, you answered yes to at least one of these questions.
These budget busters are called “Known, Upcoming Non-Monthly Expenses.” The reason these expenses get forgotten is because they are non-monthly so they tend to be pushed to the back of the mind until the bill suddenly comes in the mail. But when they do finally appear, they can create a financial emergency causing you to either break your budget or go into debt.
Think about what non-monthly expenses you know will come up throughout the year. Here are a couple of common expenses that people have:
- Car tires need to be replaced
- Heating & Air goes out
- Life insurance premium
- Property taxes
- Health Insurance deductible
Once you have these expenses listed out, you can plan to save monthly for them in your regular budget. Check out our Known, Upcoming Non-Monthly Expenses Calculator to do this with ease. Below is an example of the calculator in action:
By knowing what these expenses are and saving for them monthly, you’ll no longer have to “come up” with the money when the bill arrives. You will simply be able to pay the bill in cash. A cool feature of this tool is that not only does it calculate what you would need to save per month, but it also calculates the amount based on different pay frequencies. If you get paid twice per month, you would need to save $289.58 out of each paycheck. For a bi-weekly frequency, you would save $267.31. Regardless of how often you get paid, you can save accordingly and have the money available when you need it.
Tips for using the tool:
- Be sure to recalculate your monthly savings number at least once per year.
- Don’t forget more long-term expenses such as college, weddings, vehicle replacement, and major home renovations.
- Make your savings for these expenses AUTOMATIC by establishing an auto-draft.
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