3 Ways to Save for the Unexpected and Unusual

A draw back to budgeting is there are always expenses that come up unexpectedly -or they were expected and forgotten- every year. The difference between being prepared for these expenses or not can be the difference between a having the money to pay your bills or going broke. Below are three tips to save for three types of unexpected and unusual expenses.

1. Build an Emergency Fund
If you could only do one thing to prepare for the unexpected building an emergency fund should be it. This is without a doubt the best way to secure yourself financialy against an unexpected future. For more information on this vital topic take a look at this article. Once your emergency fund is created you will be protected in the event that your car needs repairs, or the washing machine breaks, or -God forbid- you are laid off from your job.

2. Plan for Infrequent Bills
So you have got your emergency fund built or atleast started. Good for you, it is a major step in the right direction. You even have a budget that allocates your money each paycheck. But what do you do for those infrequent bills that come once or twice a year like licenses plate renewals and membership fees? If you have created a zero based budget all of your income is spent on paper before you get it. Chances are, since you do not pay these expenses every month, they are not budgeted for.

Don’t fret, planning for these expenses takes little time and only a bit of effort. Take a few minutes and think back on all those bills that showed up only once or twice last year. Once you have them, write down the total and divide by 12. If you save that amount every month, you might want to include a bit extra just in case, you will be ablle to build up a savings for infrequent expenses so that you won’t be surprised the next time those yearly license plate renews come up.

3. The Infrequent, Unset Expenses
The above might be just fine when you know, or at least have an idea, how much those infrequent expenses will cost. What should you do however to plan for unset expenses like everyones favorite holiday… Christmas? A lot of people do not plan for this event even though they know it is coming (it is the same time each year, every year after all ). Anyway, what do you do to plan for this when you don’t know how much it is going to cost?

My solution is to do the same thing that we discussed in number 2 above, take the total and divide it by 12 months. Since I don’t know how much I am going to spend yet this coming season, I reached for the best indicator of my future spending that I have… my past behavior. My wife and I added up our Christmas bills from last year and reasoned that this coming year would more then likely be similar. Even if it is not, at least we will have a good portion of this expense covered. If you put the same ideas into practice you will be covered as well.

Good Luck, Good Saving, and God Bless