If you are trying to live on a budget and you have not planned for non-monthly expenses, it is just a matter of time before your budget is destroyed by one of these time bombs lurking just below the surface!
Anyone who has ever tried living on a budget knows that the biggest budget busters are not regular monthly expenses, but non-monthly expenses forgotten in the budget because they only come due periodically. Annual, semi-annual, quarterly, and occasional payments break the bank far to often… so today let’s explore how to get control over these common budget busters.
You Have To Plan
If you do not keep a budget, then start. If you do not manage your money, your lack of money will manage you. Sick of living paycheck to paycheck? Sick of never having any money? Sick of using credit cards and wasting money on interest? Then start budgeting!
Once you start budgeting, one of the first problems you will face will be a non-monthly whammy that you forgot to plan for. I promise… don’t worry, it happened to us too. Here’s what we did to make sure it never happens again:
- Make a list of non-monthly expenses. Brainstorm as many as you can remember and write them down. You may consider breaking your list into Fixed Non-Monthly Expenses and Variable Non-Monthly Expenses
- Create a separate savings account for your non-monthly expenses. Scroll down to see why I use Capital One 360 and how I create my sub-accounts for this purpose.
- Fund new account automatically each month. Hopefully your bank gives you some sort of automatic savings plan to disperse a certain amount into the new fund automatically each month – yet another great reason to use Capital One 360 for banking.
Make a List of Non-Monthly Expenses
Here is an example list of non-monthly expenses that are normally paid via lump sum payment – there are fixed and variable non-monthly expenses that you can plan for.
As I already mentioned, the list in the picture above is just an example of expenses others may have. I am providing it to help you brainstorm and remember all the non-monthly expenses you may have floating around. Remembering what all your expenses are is actually the hardest part of this entire exercise. You will undoubtedly forget an expense here or there, but you can adjust when the time comes – at least you have most of them planned for now, and eventually you’ll nail them all down.
For us, our personal list is made up mostly of auto expenses with a few others thrown in for good measure. We also limited ours to anticipated fixed non-monthly expenses for now. We’ll tackle the variable non-monthly expenses later.
Create a Separate Savings Account for your Non-Monthly Expenses
For many reasons that I often bring up, I am a HUGE fan of banking with Capital One 360. They make saving easier because they allow you to easily create sub-accounts for all your separate savings goals. Budgeting for non-monthly expenses basically involves saving the money over the course of the year so you have it available and will not be taken off guard when the lump sum payment comes due.
If you do not bank with Capital One 360, sign up here.
If you already have an account with them, follow these simple steps to create a sub-account for your non-monthly expenses account:
- Click on “Open an Account.”
- Under “Capital One 360 Savings” click “OPEN NOW.”
- Select the type of account you wish to open – I always use “Capital One 360 Savings Account – Joint.”
- If opening a joint account, enter the joint account holders information.
- Name your account “Fixed Non-Monthly Exp”, choose the account you wish to fund from, and enter the amount you wish to open with and click “Continue.”
- Review the info for accuracy, click the two check boxes, and click “Open Account.”
Fund New Account Automatically Each Month
Yet another reason to love Capital One 360… their Automatic Savings Plan feature.
Now that you have your account your sub-account created go to your “My Accounts” tab and click “Automatic Savings Plan” and set up the amounts calculate above to fund your Fixed Non-Monthly Exp fund with the necessary amounts.
Now whenever a non-monthly lump sum expense rears it’s ugly head it will not be a budget buster! When it arrives simply log into your Capital One 360 account, do an “Instant Transfer” to move the money from you Fixed Non-Monthly Exp fund into your regular checking account and pay the bill accordingly.
It’s that simple!
Now you have no excuse to let lump sum payments sneak up and bust your budget.
What About You?
What non-monthly expenses do you have? Do you they take you by surprise? Let us know some of the strategies you use to handle these expenses so they don’t bust your budget!