Keep A Tight Budget By Tracking Your Irregular Expenses
Over the years I’ve blogged about projected expenses which you may know as irregular expenses.
For those of you who don’t call them projected expenses, I’ve written a post for you as irregular expenses seem to be a popular way of describing it.
These are expenses that may pop up once a year, maybe twice or three times that you need to pay for at some point in time.
The problem is that most people don’t save for irregular expenses and it can mess up your monthly budget.
Ideally, you’ll want to save your irregular expenses each month until the bill comes due.
Below I will show you how we save for our projected expenses with examples and a free budget binder printable.
If you have any questions after please leave me a comment and I’ll reply.
Types Of Expenses
Before you start budgeting its important to understand how each of these three types of expenses will impact your monthly budget.
- Fixed Expenses: These are expenses where you know the cost and it doesn’t change. Rent, Mortgage, Insurance, Loans
- Variable Expenses: These are expenses that will go up and down in cost. Hydro, Water, Grocery, etc.
- Irregular Expenses or Projected Expenses: Expenses that come at a certain point in the year. They may be one-time expenses or more frequent but not monthly.
Your first task is to make a list of all your expenses including your irregular expenses and categorize them.
You may not be able to gather all of your future expenses at one time because some pop up out of nowhere.
Unfortunately, you can either add the expense in as soon as you know or save it for the following year when you calculate your irregular expenses budget binder sheet.
For example: If you find out you have an irregular expense that is $200 and it’s due in June and it’s May you have two options.
- You add it to your irregular expenses budget binder printable and save for 2 months.
- Wait until the following year and add it to your irregular expenses budget binder printable if it will be a reoccurring yearly expense.
How To Calculate Irregular Expenses
To calculate irregular expenses or projected expenses it starts with knowing the cost of what the expense will be.
Even if you don’t know exactly the cost as long as you have an idea of what it could be you can still project and save for it.
Example: Vehicle Sticker is $120 a year and your birthday is in December.
Now, you can save from Jan to Dec to have the money saved in December however you can save for it a month behind.
If you save from Jan to November you would save $10.90 a month
However, if you save Jan to December you would save $10 a month.
The choice is yours and based on when the bill is due also comes into play here as well.
Irregular Expense Example with Unexpected Yearly Increase
There have been times where we set out irregular expenses for the year and find out that the price has increased.
For example, our CAA membership went from $99 a year to $120 a year so we were off by $21.
That’s no big deal as long as we saved for what we projected from the start.
What you can do is once you find out the cost difference you can adjust your monthly saving to reflect that price until it is due.
If the cost of your irregular expenses does not change then you should have saved exactly what you need when the bill comes due.
So if our CAA is due every October and we save $11.11 a month for 9 months we like to be one month ahead but you can do it for 10 months so you have the money for the month it is due) but find out in June that the cost increased to $120 we increase our irregular expenses to $17.78 for the remaining 3 months.
CAA (Cost $99/yr due October 2020) but then we find out in June that it had increased to $120.
From January to June we have saved for 6 months a total of $66.66 of the $99 but now it’s $120 we need to save for.
$120-$66=$54 left to save until the due date (in this case Sept as we save a month ahead)
So for July, August and September $54/3= $17.78 we need to save each month and come October the $120 CAA bill will arrive to be paid as an irregular expense or once a year expense.
Jan $11.11 Feb $11.11 March $11.11 April $11.11 May $11.11 June $11.11 July $17.78 Aug $17.78 Sept $17.78 Oct $120 DUE
Steps To Follow For Planning Irregular Expenses
All you have to do is follow these simple irregular expenses steps:
- Document which expenses you will have to pay for throughout the year and include irregular expenses.
- Write in the projected expense cost when it comes due
- Divide that number by the number of months until the bill is due and adjust the numbers if you find out the bill will be higher.
- Do this for the entire year of irregular expenses (guestimate if you don’t know the exact number)
- Save the dollar amount of irregular expenses in a separate savings account only for irregular expenses. We use Tangerine Bank for our projected expenses as it’s free, easy to sign up for and simple to transfer from our Simpli Bank. This way it’s out of mind and set aside.
- At the end of the year, you will know how much you saved for projected expenses for the following year.
That’s how easy it is to make sure you have those irregular expenses saved for when the bill comes due.
If you have any questions please comment below.
Here is the LINK where you can find the Irregular Expenses Free Budget Binder pdf download. (Scroll to the 2020 Budget Bidner Free Budget Printables Section).
Home Budget Income Report August 2020
Where did the money go?
Hi CBB readers,
We had a relatively quiet August for spending money although we did have a large medical bill for our son at $250.
I think it was last year I mentioned we may be putting him in a program to work on his vision issues with a cost of $7500 a year.
There are no benefits for this and we have to pay out of pocket. We’ll do anything for him though.
Other money was spent to buy more renovation materials for our basement which will be ongoing forever it seems. haha!
We bought some back to school items for our son as well as some birthday gifts which were projected expenses.
For September we are doing a No Spend Month so we are buying nothing outside of what we need.
Home Budget Percentages
Our savings of 54.64 % include investments as well as any savings for this month based on the net income of $11,346.01.
We save money in our projected expenses for things that need to be paid for in the coming months.
All of the categories took 100% of our income which shows that we accounted for all of the income in August 2020.
This type of budget is a zero-based budget where all of the money has a home.
Monthly Home Budget Expenses
Below is a breakdown of our expenses which helps us to understand where all of our money goes.
- Chequing– This is the bank account where all of our debt gets paid from. We use Simplii Financial.
- Emergency Savings Account– This is a high-interest savings account.
- Regular Savings Account– This is a savings account that holds our projected expenses.
- Monthly Budgeted Total: $6,392.68 (this will change next month)
- Monthly Net Income Total: $11,346.01
- (Check out our Ultimate Grocery Guide to see where our grocery money goes)
- Projected Expenses: These are expenses we know we will pay for throughout the year = $852.91
- Total Expenses Paid Out: $6460.06
- Total Expenses Paid Out: Calculated is $11,346.01 (total net monthly income) – $852.91 (projected expenses) –$4,033.04 (savings to emergency fund) = $6,460.06
- Actual Cash Savings going into Emergency Savings: Calculated is $11,346.01 (total monthly net income) – $6,460.06 (actual expenses paid out for the month) – $852.91 (projected expenses) = $4,033.04
Monthly Budget and Actual Budget
Below you will see two tables, one is our monthly budget and the other is our actual budget.
This budget represents 2 adults and a pre-schooler, plus retirement investments.
Budget colour chart: If highlighted in blue that means it is a projected expense.
Since May 2014 we’ve been mortgage-free so much of our money will be directed at savings, investments, and renovations.
I appreciate that you enjoy this budget update each month but I do hope you view this as an educational tool rather than comparing your financial numbers as our situations are all unique.
Spending less than we earn and budgeting has been the easiest way for us to pay down debt and save money.
Monthly Home Budget Actual Expenses
CBB Home Budget Updates Month By Month
Just in case you missed our budget updates from 2012- present I’ve compiled them all on one handy page: monthly budgets.
2020 Home Budget Challenge
July Update: We are still 2 players in for the Budget Challenge 2020.
These two budget challengers are going to ride it out until the end of 2020.
Let’s have a look at what happened with their monthly budgets in August.
Budget Challenger #1
In August we usually try to send funds that we can afford to “do without” to one of our non-registered investment accounts to increase the amount in our long term savings.
Hubby says the funds simply disappear and are never to be seen again! LOL
I tell him that he’ll see the money again but not until we are both retired or I am dead and gone! Ha haha!
Unfortunately, this year we didn’t have any funds left in the kitty to send off.
Last month, in addition to the surprise medical expense, we got the spring/summer invoice from our landscapers and it was DOUBLE what I normally spend.
Our fence & cedar planters needed to be hand-stained with a colored stain this year, instead of simply spraying a clear coat it was time to cover age-related weather staining. The additional labor accounts for our price increase.
The top priority this month was working on repaying the funds that we borrowed from our EMERGENCY ACCOUNT before any more medical expenses crop up! We’ll keep working on it next month.
It was a case of wiggle, wiggle, jiggle, jiggle, and shuffling funds back and forth to keep the chequing account in the black until we can get back on a little better financial footing.
On the positive side, I am really glad I ordered gas gift cards (Petro Canada, Esso, and Shell) a few months back using our expiring Marriott Bonvoy points.
We’ve been going thru gasoline like it’s water driving back and forth to all my medical appointments!
Budget Challenger #2
Hey Mr. CBB and all,
Just a quick update this month as I’m late getting this in!
Good this month – groceries are a lot lower than they normally are, and that was including doing a large order which came to over $100 – which I never do.
I’m more of the shop a million times for $5-10 per pop and I think we got a lot of staples so hopefully, that will help.
Gas also wasn’t too bad, but it definitely hurts compared to when I was working from home.
I’ve applied for a job that has a further drive for me, so if I get that job that will definitely hurt, but in November I won’t have a car payment so hopefully that will lessen the sting.
Bad this month – land fees due to the bank, it was expected, but it still sucks seeing a large chunk of money coming out of your bank account.
Of course, fast food is high, but some of it is buying for other people.
I’ve learned to accept my weakness and am trying to do better about bringing lunches to work, and only eating out when I’m visiting family as they live 2 hours away, I’d rather eat out then pack food for the drive!
The meh – I had paid for an American event happening in October, and it was rescheduled until next year.
I had the option to just leave my money with them and go next year, or to get my money back.
Since we don’t know what will happen I decided to get my money back but I guess there has been a difference of a decent amount since I purchased the event ticket in February because I lost $44 in the exchange rate when the money was returned.
This sucks, but honestly, I’d rather have my money back than wonder if there will be an issue next year, or they go bankrupt, or something happens and I don’t get my money or have to fight for it.
Sometimes a little peace is worth the money.
Thanks to Mr. CBB for the reminder to write this report, the next one will be more detailed!