The Secrets to Budgeting for Irregular Expenses Without Using Debt

budgeting irregular expesesBudgeting for irregular, unplanned and one-time expenses can be a challenge.   It requires an extra level of planning and a bit of discipline to make it happen.  Yet the extra planning is important to being able to lead a life that is as debt free as possible.

Consider it like going on vacation without a plan for how to manage your diet.  Without a plan you eat more, eat more bad stuff, exercise less and overall end up gaining weight and scrambling to maintain all the hard work you have put in. Consumers has the best reviews of diet plans available online!

Don’t let this happen to your budget and financial goals!

Here are some tips to help you manage your irregular, unplanned and one-time expenses.

  • You must plan ahead– you can’t just expect to have the money when the time comes.  Being intentional and planning your spending is crucial to dealing with irregular expenses.  We always have an ongoing list of things we are saving for, how much they cost and when we want to do them.  Without planning you are just letting your spending happen.
  • Yearly expenses that are on a regular basis should be saved for monthly, for example if you pay your own taxes and insurance on your house.  Build this into your budget as a regular monthly expense, and move the money to a dedicated savings account.  Then when the bill is due, transfer the money back to your checking account to be paid.
  • Infrequent expenses that don’t happen yearly, such as a car, require you to plan a couple years out.  For example, I knew I wanted to replace my car when she turned 10, so we began planning that into our long term plans and budget a couple years out.  When it is time to start setting the money aside open an online savings account and start transferring money into the account every month.
  • Unexpected Expenses – this is where your emergency fund comes in to play.  You simply cannot plan for every expense.  Life throws us too many curve balls to be able to know exactly what you need.  Not all of us have crystal balls to see the future!  Therefore you need cash set aside to catch these expenses.
  • Have an overflow account.  Want a more generalized plan?  Open one big savings account to catch all your upcoming non regular expenses.  This is above and beyond the emergency fund that you should have.  We moved to this method a few years back and love it.  I manage it by funneling extra cash into the account in addition to the amounts I have allocated for my yearly and infrequent expenses.  Then I run a cash flow on it with the upcoming expenses to ensure I am on target.  I do this in an excel spreadsheet.   (For an excel example excel sheet and video showing how I use them, check out How to Tame the Budget Monster.  They come with the eBook.)

Budgeting for irregular, unplanned and one-time expenses can be hard, but it is more than worth the effort to keep your financial plans on target.  No sense in gaining debt and having to scramble to get back to where you were.

Your turn to share – How do you manage these expenses in your budget?

Trevor says June 11, 2013

Good tips! Just when I think I’ve got all my expenses figured out, unexpected things come up. So far all I’ve done is keep a healthy balance. I always try to scrimp and save so that my balance is high so I always have room for extra expenses.

KC @ genxfinance says June 13, 2013

Great tips. Planning ahead always helps. You expect that there will be unexpected things that you’ll be spending on for a specific month so you prepare for it.

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