Costs that aren't always in the monthly budget
On a month-to-month basis I budget for things like my rent, groceries, gas, etc. But what happens when we have expenses that aren't usually in the monthly budget? How should we budget for one or two large costs that might only come around once a year? With warmer days finally upon us, we shouldn't be letting any unexpected bills surprise us and put a damper on having fun this summer!
For example, I bought a car a few weeks ago and registered it last Friday. I'm proud to say I'm the owner of a 2008 Subaru Legacy. I saved a little bit every week for an entire year so I could buy the car outright. So that expense I saw coming, but I did forget (or maybe chose to ignore) the cost of getting it registered. And the cost of insuring the darn thing! I knew I had to insure it but after getting quotes, it seems like I wasn't really ready for that cost.
Another thing I had to re-budget for was funding a visit to my dentist office for two fillings which cost me over $200. And that was after insurance. But hey, that's why we have insurance because without it I would have been looking at a bill over $600.
Needless to say I had to put away some extra money for a few weeks before being able to pay the bill. Now that I know what to expect, I'll be planning ahead for my next dental visit. And probably not scheduling two fillings in one sitting, my wallet can't handle the pain.
Plan ahead and organize your stash
Now that I've had a few unexpected costs pop up in the past few months, I can plan ahead and alleviate the stress of coughing up money for something I did not budget for.
My suggestion to you is to ask about club accounts at your credit union! It's a separate account from your main savings account and allows you to save money all year round for something in particular or it can always be used as an emergency fund.
Once you open your club account, start making payments to the account with every paycheck you get. Depending on the week (and what expenses are due) I'll transfer anything from $20 to $75 into my club account. This allows me to see my emergency fund grow on a weekly basis which gives me piece of mind when it comes time to register my car or fund dental visits.
When it comes to starting an emergency fund, saving roughly 10% of your monthly income is a great place to start. If you can save more that's great, but if you can't just make an effort to save as much as you can.
There are no fees for the club account and when the time comes to pay your unexpected expense, transfer the money into your checking account. It's that simple!