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How to Budget for Big Expenses That Only Happen Once or Twice a Year

Expenses that only come around once or twice a year have a funny way of sneaking under the radar. You spend time getting your monthly budget just right, then whack! A big expense comes out of nowhere, putting an unwelcome dent in your perfectly polished budget.

We’ve all been there. Whether it’s annual insurance premiums or homeowner’s association (HOA) dues, it’s easy to overlook costs that don’t hit your pocket on a regular basis.

So how do you ward off another sneak attack? Here are a few tips to get you started.

Revisit Your Past

Before you plan next month’s budget, it’s a good idea to see what you spent money on last year. Don’t worry! You won’t need a time machine to tackle this job. Bank statements will do just fine.

Look for any spending transactions that fall outside of your monthly routine, and write down the amount and date due. Your list might look something like this:

Irregular Expense Amount Date(s) Due
Car insurance premium $850 January 1
Tag renewal fees (x2 vehicles) $85 March 31/September 30
HOA dues $200 January 15/April 15/July 15/October 15
Family dental cleanings $300 June 10/December 10
Annual vet check-up $150 April 18
Quarterly pest control $75 February 5/May 5/August 5/November 5

Flash Forward to the Future

Now that you’ve made a list of all your irregular expenses, it’s time to work them into your budget. That way they don’t show up uninvited down the road.

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Let’s say you pay your annual car insurance premium and quarterly HOA dues every January. Why not go ahead and add them to your January budget now so they’ll be waiting for you when the new year rolls around?

With EveryDollar, it’s super easy to plan ahead. Simply use the copy feature to create future budgets in a flash. Then plug your irregular expenses into the months they’re due.

Don’t worry about completing an entire year’s worth of budgets right away. The goal is to add placeholders that remind you to factor one-time expenses into future monthly budgets. You’ll have plenty of time to fine-tune your budget as each month draws near.

Another option is to create a monthly fund for each irregular expense. That way you can break the cost down into smaller bites throughout the year. For example, let’s say you owe $200 for HOA dues at the beginning of the year. You could start budgeting $67 a month for it in November to soften the blow in January.

Build in a Buffer

It’s nice to know you have the cash to do all the fun stuff you budgeted for and cover the occasional slip-up. So how do you do that without dipping into your emergency fund? Add a surprise expenses category to your monthly budget.

It doesn’t matter how much you set aside. Even $50 a month can do the trick. If an overlooked expense pops up, that’s $50 you don’t have to subtract from other budget categories. If you end up not using it, throw it at your current Baby Step, and you’ll be $50 closer to your goal!

Here’s another creative idea to pad your pockets: Find ways to cut irregular expenses down to size. A recent J.D. Power study shows that drivers who switched auto insurers saved an average of $388 on their annual premium. Imagine how much more you could do with that money back in your budget!

Give Yourself Grace

So does all this new knowledge mean you’ll never overlook another expense again? Probably not. We’re all human, and mistakes come with the territory.

That’s why it is great that your budget can be tweaked to fit your needs.

Remember, budgeting isn’t a one-and-done activity. If a surprise cost sneaks in, don’t panic. Just scale back a few categories to make room for it in your current budget. You’ll have your money back on track in no time!

Looking for ways you can save money each month? EveryDollar has people who can help.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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