Budgeting for irregular expenses can be difficult and frustrating.
One moment you feel like your budget is in great shape, and the next, you feel like it’s holding on by a thread. It’s almost defeating enough to make you want to give up on your budget, entirely.
Before you throw in the towel, I want to share 10 strategies I use to budget for irregular expenses.
Hopefully, these tips will help you predict and prepare for the sporadic expenses that are currently plaguing your budget.
1) Add A Miscellaneous Category To Your Budget
If you don’t already have a “Miscellaneous” category in your budget, now is the time to add one.
No matter how consistent your spending is, there’s going to be an occasional expense that slips your mind or a surprise (non-emergency) bill you couldn’t predict.
Whether it’s an annual doctor’s visit, a new pair of glasses, or that pest control company that comes out once a quarter, irregular expenses are inevitable.
By having a “catch-all” category for these expenses, you can rest assured knowing that you have a place to put them in your budget.
In other words, you won’t have to dip into other categories of your budget to cover these costs.
How much money should you budget for miscellaneous expenses?
As a good rule-of-thumb, you should allocate between 1% and 5% of your monthly income for miscellaneous expenses. When setting this percentage, you should consider the consistency of your monthly expenses, as well as the accuracy of your budget.
For example, if you’re new to budgeting and, thus, still working out the kinks in your spending, then you might want to allocate around 5% of your monthly income for miscellaneous expenses.
On the other hand, if you’re monthly spending is pretty consistent, and you’ve got your budget down to a science, then you might only allocate 1% of your income.
As with any financial decision, you need to weigh out the options, and figure out what works best for you.
2) Keep A Master List Of Your Irregular Expenses
Whether you keep your list electronically or on a good old-fashioned piece of paper, it’s important to have a master list of your irregular expenses.
This way, you can ensure that you’re not forgetting any expenses when you’re creating your monthly budget.
Your master list might include items such as:
- Annual doctor’s visits
- Dentist appointments
- Car registration and insurance and maintenance
- Pest control services
- Lawn care services
- HOA dues (if applicable)
Some of these expenses might be annual, some quarterly, and some might not have a specific interval.
Regardless, you should do your best to brainstorm all of the irregular expenses you have to pay throughout the year. Then, add the expense to your master list and, if possible, include the month it has to be paid.
Additionally, every time you run into an irregular expense that slipped through the cracks, be sure to add it to the list.
By keeping all of your irregular expenses on a master list, you’ll have a much easier time budgeting for them throughout the year.
3) Make Budgeting Adjustments In Order Of Priority
If an irregular expense cuts into your monthly budget, you might have to make some adjustments in order to free up some cash.
But before you start making any drastic changes, you need to decide which categories your can pull money from without harming your progress toward your financial goals.
In other words, you should prioritize the categories in order of least important to most important.
For example, when I have to make a budgeting adjustment in order to pay for an irregular expense, I always pull from recreational spending first.
In most cases, this will cover the expense.
However, if I exhaust this category, I typically opt to pull money from my automotive budget, and then food/groceries.
Since I can reduce my driving, and my wife and I can buckle down on grocery spending, we can usually squeeze a few extra bucks out of our family budget categories without harming our financial progress.
Basically, the point of this whole exercise is to use your monthly savings as an absolute last resort.
Since saving and investing your money is pretty much the entire point of living on a budget, (i.e. your highest priority) you should do everything you can to avoid pulling from savings.
4) Use The Debit-Card-Only Rule
One of the best ways to avoid irregular expenses is to keep your spending organized. And oe of the best ways to do that is to use the debit-card-only rule.
In other words, whenever you spend money, it has to come from your checking account.
Why is this so effective?
Because you only have to log in to one account in order to track your spending.
This makes budgeting incredibly fast and easy. And, since all of your spending flows through one account, it reduces the chance of an irregular expense slipping through the cracks.
I know, for some people, this rule might seem a little drastic. But speaking from personal experience, you’d be amazed by how much easier this little financial habit can make your life.
Don’t knock it til’ you try it!
See Also: 21 Simple Tips To Make Budgeting Easy
5) Eliminate Your Consumer Debt
Another way to lighten the burden of irregular expenses is to get rid of your consumer debt.
If you’re carrying a balance on your credit cards, or have any other outstanding loans, (e.g. a personal loan or student loans) the payments you’re making each month are eating into your financial margin.
And with less financial margin, you’ll have a harder time managing the cost of irregular expenses.
Consider this, for every $500 monthly debt payment, you are sacrificing $6,000 of annual savings.
That’s a huge amount of money that could be used to cover irregular expenses or boost your savings and investments.
Beyond that, the more debt payments you have to make, the more financial obligations you have to keep track of.
By paying off your consumer debt, you are not only freeing up room in your budget, but you’re also freeing up space in your mind.
That’s a win-win!
6) Bolster Your Emergency Fund
If you don’t have an emergency fund, now is the time to start one.
An emergency fund is a savings account that is used to cover unexpected expenses, like a car repair or medical bill.
Ideally, your emergency fund should be able to pay for 3-6 months’ worth of your living expenses. This will ensure that you have enough money to cover yourself in the event of a job loss or other major financial setback.
While having an emergency fund won’t make irregular expenses disappear completely, it will give you an additional cushion to fall back on if you’ve exhausted all your other budgeting options.
And in the long run, it will help you avoid going into debt to pay for any large, unexpected bills.
7) Budget With Your Spouse
There’s no doubt about it, marriage adds a bit of complexity to your financial situation.
When you have 2 people spending money within the same budget, it’s much easier for irregular expenses to sneak up on you.
Therefore, as often as you possibly can, try to budget with your spouse.
From preparing your monthly budget to logging your daily expenses, the more you work as a team, the fewer financial surprises you’ll have to deal with.
8) Update Your Budget Daily
Another great way to handle irregular expenses is to update your budget daily.
I know, this sounds like a lot of work. But it actually makes budgeting a much easier process.
When you update your budget on a daily basis, you get an up-to-the-minute snapshot of your financial situation. This allows you to quickly identify any areas where you may be overspending and adjust your spending accordingly.
What’s more, if an irregular expense does pop up, you can immediately make provision for it in your budget.
9) Pay Yourself First And Last
When it comes to budgeting for irregular expenses, one of the best pieces of advice I can give you is to pay yourself first and last.
In other words, get in the habit of setting aside money for savings and investments before you even start paying your bills.
Additionally, at the end of the month, after you’ve paid all your other expenses, you should take any leftover money you have and put that into savings as well.
How, exactly, does this help you budget for irregular expenses?
Well, by saving first and last, you can allocate a little extra money to your miscellaneous expense category rather than saving too much and putting unnecessary strain on your budget. Then, at the end of the month, if you haven’t had to deal with any irregular expenses, you just throw that money into savings.
See Also: 15 Easy Ways To Save Money Each Month
10) Be Selective With Automatic Payments
There’s no doubt, one of the easiest ways to simplify your financial life is to automate your bills.
However, this can be a double-edged sword–especially if you put an irregular expense on autopay.
That’s why, we only recommend setting up automatic payments for fixed, monthly expenses.
In other words, if you ever sign up for something that is billed on anything more than a monthly basis, you should pay it manually.
In most cases, services like these will send you an email letting you know about your upcoming payment. This, in turn, will eliminate any kind of financial surprises and make budgeting for irregular expenses a much easier task.
Budgeting For Irregular Expenses: Summary
If you’re struggling to budget for irregular expenses, you’re not alone. In fact, this is one of the most common financial challenges people face.
Hopefully, by following the 10 tips we’ve outlined above, you can reduce your financial surprises and keep your budget on a positive track.
What strategies do you use to budget for irregular expenses? Let us know in the comments below!