Budgeting for fixed expenses like rent or mortgage payments isn’t too difficult. Planning for variable expenses like grocery bills is a little more challenging, but you can usually get by with averages of prior months’ spending. Arguably the most difficult category of expenses to prepare for are the irregular expenses — things that happen every few months, or on no set schedule.
It’s easy to forget about these expenses, and end up scrambling to gather enough cash when you finally get the bill. But it is definitely possible to budget for your irregular expenses. Just make a list of them, note how much each one costs and how long you’ll have to save to pay for it, and decide how much you must save per month.
Here are seven irregular expenses you can’t forget to include.
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1. Insurance premiums
You probably pay some insurance premiums monthly, but others may only come due once or twice per year. These are a little tricky to plan for because rates might change from one policy term to the next, but you can use your latest insurance premium to estimate your next bill or contact your insurer for an estimate.
It’s not a bad idea to shop around at least once a year for auto, renters, and homeowners insurance to see if you can get a better deal. This can help you save a little every month without compromising on coverage.
Self-employed people and homeowners might have to set aside money for estimated taxes or property taxes, respectively. Estimated taxes are paid quarterly on the 15th of April, June, September, and January of the following year, unless one of these days falls on a weekend, in which case the due date moves to the next business day. Your tax return from the previous year should tell you how much you have to pay quarterly, and you can use this information to figure out how much to save per month for these taxes.
Homeowners whose property taxes are not rolled into a mortgage must save for these separately. You can use last year’s tax bill to estimate your property taxes for this year, then divide this by 12 to figure out how much to save per month. Consider building in a cushion in case your property taxes go up.
3. Vehicle expenses
Cars come with a lot of irregular expenses, including auto insurance (mentioned above), gas, parking fees, routine maintenance (like oil changes), and sometimes large expenses (like new tires). How often some of these expenses arrive depends on how much you drive. Look back through your credit card and bank statements for the past year or so to figure out approximately how much you spent on vehicle expenses, then adjust up or down according to how much you expect to drive this year.
Between the holidays, birthdays, weddings, and graduations, you’re likely to buy quite a few gifts during the year. Make a list of the people (and occasions) you plan to buy gifts for and decide how much you’re going to spend. Total them up to figure out how much you’ll spend on gifts for the year, then decide how much you need to save each month to fund it. Of course, you may need to save a little extra at first if you have to buy an expensive gift in the near future.
5. Subscriptions and membership fees
Subscriptions can be monthly, bimonthly, quarterly, or annual. Look back through your old credit card and bank statements for streaming services, magazine subscriptions, gym memberships, or other online services you pay for. Cancel any you’re not using, then figure out how much to budget for the rest.
6. Pet care
Pet owners need to plan for pet food, vet visits, and possibly prescription medications. You can cover emergency pet expenses with your emergency fund if you have one, but you should save up for routine vet visits in advance. If you pay someone to look after your pet when you’re away, you should try to include a rough approximation of these costs in your budget.
7. Seasonal clothing
Often, it’s not until a new season is here that we realize the gaps in our wardrobe. Old clothes get worn out or don’t fit anymore, and sometimes you just want new pieces to liven up your wardrobe. It’s fine to buy a few new items, especially if you truly need them, but don’t go overboard or you’ll waste money. Decide on a reasonable amount for clothing each season and try to stick to it.
This isn’t an exhaustive list of irregular expenses, but should give you some idea of what to plan for. You can go back through your credit card and bank statements and look for any other irregular expenses that might recur and include these in your budget, too.
View more information: https://www.fool.com/the-ascent/banks/articles/7-irregular-expenses-you-cant-forget-budget/