If you have a budget, you should have an idea of your typical monthly expense. But do you budget and plan for your non-monthly expenses that you owe quarterly or annually? These could be things like: renters insurance, quarterly taxes, Amazon Prime, membership dues, etc. These expenses can throw you for a loop if you’re not prepared for them.
These expenses can throw you for a loop if you’re not prepared for them.
1. Figure out how much you spend in non-monthly expenses
It’s important to know how much you are actually paying in non-monthly expenses. This is a big part of your overall budget.
I personally owe $472 in annual expenses. That might sound like a lot, but spread out over 12 months, that is only $39 a month that I need to set aside.
My expenses are broken out like this:
Sierra Club Membership
Planned Parenthood Membership
EMILY’s List Membership
Southwest Airlines Credit Card Annual Fee*
American Airlines Credit Card Annual Fee
Go through all of your non-monthly expenses. Is there anything that you’re paying for that you don’t want to pay anymore? Can you cut something? Are you paying for something you forgot you have but you are excited to take advantage of again? This is a good exercise to go through each year, and a great way to cut costs.
*I don’t usually recommend paying an annual fee for a credit card, but if you fly with a particular airline often, you may end up actually saving money in miles and free checked luggage.
2. Create a savings account specifically for those expenses
I’m a huge proponent of opening separate savings accounts for all of your financial goals. How else will you know if you’re achieving them? Open an account specifically for your non-monthly expenses. Now that you’ve figured out how much you owe in non-monthly expenses, you can figure out how much you need to save each month to cover them.
3. Automatically save for these expenses each month
I have it set up that I’m putting aside at least $39 a month for my annual expenses. This way, I’ll never be caught off guard by one of these charges again. I used to get stressed out every May when my renters insurance bill would come. Now, I am confident that I will always have that money set aside when the bill is due. Make an automatic deduction into your savings account so you never forget to be prepared. The peace of mind is worth it.
4. Pay attention to when the expenses are due
It won’t matter very much that you’ve saved money to pay your quarterly or annual expenses if you forget to pay them. Put a reminder on your calendar or have them be automatically charged to your credit card. If you’re worried about overdraft fees, it might be best to just set a reminder for yourself. Then, you can move the money from your savings account into your checking account and pay that bill off with ease.
Certified Financial Education Instructor. Feminist and financial coach for women. Founder of Money Circle.