Ever think about the fact that the holidays come at the same time each year…yet somehow we forget to budget for them? Or that you need to fill your home’s oil tank a couple of times each year (for those of us in old houses), yet you never seem to have enough cash?
If you take a minute to consider it, there are lots of expenses that only happen a few times a year, so we don’t really plan for them. But why not? A few years ago, my DH and I sat down and brainstormed every annoying expense that had caught us by surprise. Could we somehow anticipate them?
Here are a few that we came up with:
Car Maintenance: We don’t have car payments, but we do have two 14-year-old vehicles that need a little work now and then. We pulled out some old receipts and figured out we averaged about $800 a year on “surprise” repairs. So now, every month, we have $80 automatically transferred from our checking account to our savings account. That $80 goes into a category called “Car Maintenance.” Voila—the next time we need a brake job, we’ve got some money stashed away with our car’s name on it. No more surprise car expenses.
Tree Pruning: A big job we hire out every other year. Rather than come up with a big chunk of cash all at one time, we have $30 automatically transferred from checking to savings every month like clockwork. It’s ready for us to withdraw when it’s time to get the trees trimmed.
Clothing: My DH only buys clothes maybe once a year. I buy for myself a little more often ☺. And I buy clothes for our two girls every season. So we have 3 clothing categories in Quicken. My DH and I each have our own, and the girls have one.
Clothing isn’t really a surprise expense; it’s more of a variable expense. So this savings category is more of a “holding tank” for clothing money. But I like having it set aside and earmarked just for clothes.
Christmas: After a few painful holidays, we decided to start saving in January for the following December. Our family tries to stick to a pretty skinny $700-$800 budget for everything. So we have $60 automatically transferred to savings every month. What you save is up to you.
House Painting and New Roof: These are our two newest categories. We figure we’ve got about two years before we need to do one or both projects. So we’ll break it down into a monthly figure, and start saving for the projects now.
See the overall pattern? Automatically transferring money from checking to savings. I don’t have every piece of money (for Christmas, for Tree Pruning, etc.) moved individually. Instead, I have a lump sum for ALL of our saving categories transferred from checking to savings every month. I track the category totals on an ongoing basis in Quicken. It’s easy, and it gives me a lot of peace of mind.
So what “surprise” expenses could you eliminate TODAY, by starting to save for them every month? Whatever you do, make it automatic. Have the money taken out of your checking account before you even think of spending it. That’s the real trick to this method.