Saving For Known Upcoming Non-Monthly Expenses

Everyone must save for three things: (1) Emergencies, (2) Known Upcoming Non-Monthly Expenses, and (3) Dreams

Of these three, it seems like saving for #2 – Known Upcoming Non-Monthly Expenses is the most difficult and creates the most issues with budgeting.

Here’s why Known Upcoming Non-Monthly Expenses create severe budgeting difficulty:

  1. They are non-monthly  Because of this, we tend to forget about them until they show up
  2. They are usually larger expenses  Property taxes, insurance premiums, Christmas, vacation, car maintenance and repairs, and insurance deductibles usually have larger price tags than typical monthly expenses
  3. We don’t save for the expenses monthly  We wait until the bill arrives and then we are forced to scramble in an attempt to pay for it

This is why I call these type of expenses “Budget Crushing Expenses.” You can avoid this stress entirely by creating a Known Upcoming Expenses saving plan!

Here’s a step-by-step way for you to eliminate “Budget Crushing Expenses” from your life:

  1. Download our free “Known Upcoming Expenses Calculator” tool HERE.
  2. Enter all your “Known Upcoming Expenses” into the tool – include the annual expense of each line item.
  3. Enter your “# of Pay Periods Per Year” into the tool – enter “12” if paid monthly, “26” if paid every 2 weeks, “52” if paid weekly, and “24” if paid twice each month.
  4. You have now calculated the amount you need to save out of each paycheck to ensure all of your Known Upcoming Non-Monthly Expenses are covered.
  5. BONUS STEP: Set up an on-line savings account (I use Capital One 360 – formerly known as ING Direct) and make your savings automatic. In other words, you can set up automated transfers to your on-line savings account. This allows you to “set it and forget it” and KNOW you’re major known upcoming non-monthly expenses are covered!

AUTHOR’S NOTE: I am paid monthly. I have set up a monthly transfer to happen on the 6th day of the month from my regular bill-paying bank account to my Capital One 360 account. It may not be the most exciting thing in life, but it is INCREDIBLE to know I have eliminated “budget crushing expenses” from my life!

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1 Comment

  1. Jenny on June 10, 2013 at 11:27 am

    This is awesome. Thanks for blessing me with this knowledge. I can use it as well as share with my love ones that are struggling financially.

    Be Blessed!

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