Make A Plan For Irregular Expenses
Lesson 13 Chapter 2 Module 3
Welcome back! Your budget is almost complete, but first we need to make a plan for your irregular expenses.
If you have irregular expenses that occur once a year or every few months, I want you to calculate how much you spend for the entire year and divide it by 12.
So for example, let’s say your property taxes are $6,000/year, you divide $6,000 by 12 and you know you have to set aside $500/month for your property taxes.
The way I recommend you handle irregular expenses is to have a separate account that you automatically transfer money to every month. This account should ONLY be for your irregular expenses and you should NOT touch it until it’s time to pay that bill.
Having a separate bank account helps to make sure that you don’t accidentally spend money that’s allocated to an irregular expense. And setting up an automatic transfer makes sure you set that money aside no matter what.
So let’s use the property tax example I mentioned earlier...
You know you have to budget $500 every month for your property taxes. So every month you should automatically transfer that $500 to a separate bank account that you don’t touch until it’s time to pay your property taxes.
A good online bank I recommend to set aside money every month for your irregular expenses is CIT Bank. I like CIT Bank because they offer one of the most competitive interest rates in the nation (9x the national average), has no monthly maintenance fees, and no minimum balance requirement after $100 to open.
If you want to earn even MORE interest on your money, make at least one monthly deposit of $100 or more in your CIT savings account OR maintain a balance of $25,000 or more. You can read more about the savings account at CIT Bank HERE.
That’s it! You officially have a REALISTIC spending plan!
However, just making a spending plan is the first step to budgeting—you now have to find a budgeting system that WORKS for your personality.
Having a spending plan is useless if you don’t stick to it. So, in the next lesson, we will discuss 3 of my favorite budgeting techniques and figure out which one is best for you. See you there!
Your Actionable Steps For This Lesson:
- Download the lesson worksheet
- Add up all your irregular expenses for the year
- Add your irregular expenses to your Monthly Budget Worksheet (from the last lesson)
- Set up a separate bank account for your irregular expenses
- Set up a monthly automatic transfer from your main bank account to your irregular expenses bank account.
- Keep track of your irregular savings and spending
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