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.
Keep A Tight Budget By Tracking Your Irregular Expenses
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, it’s essential 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 expenses will go up and down in cost. Hydro, Water, Grocery, etc.
- Irregular Expenses or Projected Expenses: Expenses come at a certain time in the year. They may be one-time expenses or more frequent but not monthly.
Your first task is to list all your expenses, including your irregular costs, and categorize them.
You may not be able to gather all your future expenses at once because some pop up out of nowhere.
Unfortunately, you can either add the expense as soon as you know or save it for the following year when calculating 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 recurring yearly expense.
How To Calculate Irregular Expenses
Calculating irregular or projected expenses starts with knowing the cost of the fee.
Even if you don’t know the cost, as long as you know 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 will save $10.90 a month
However, if you save from January to December, you will save $10 a month.
The choice is yours, and based on when the bill is due also comes into play here.
Irregular Expense Example with Unexpected Yearly Increase
There have been times when we set out irregular expenses for the year and found out that the price has increased.
For example, our CAA membership went from $99 yearly to $120, so we were off by $21.
That’s no big deal as long as we saved for what we projected.
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, 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 monthly for nine months, we like to be one month ahead.
Still, you can do it for ten months, so you have the money for the month it is due) but find out in June that the cost increased to $120.
We grew our irregular expenses to $17.78 for the remaining three months.
CAA ($99/yr due October 2020), but then we found out in June that it had increased to $120.
From January to June, we have saved a total of $66.66 of the $99 for six months, but now it’s $120 we need to keep for.
$120-$66=$54 left to save until the due date (in this case Sept, as we reserve 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 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 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 ensure 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 might be putting him in a program to work on his vision issues for $7500 a year.
This has no benefits, and we have to pay out of pocket. We’ll do anything for him, though.
I spent other money buying more renovation materials for our basement, which will be ongoing forever. Haha!
We bought back-to-school items for our son and some birthday gifts, which were projected expenses.
We are doing a No Spend Month for September, buying nothing outside of what we need.
Home Budget Percentages
Our savings of 54.64 % include investments and any savings for this month based on the net income of $11,346.01.
We save money on our projected expenses for things that must be paid for in the coming months.
All 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 savings account 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 are two tables: our monthly budget and our actual budget.
This budget represents two adults and a pre-schooler, plus retirement investments.
Budget colour chart: If highlighted in blue, it is a projected expense.
Since May 2014, we’ve been mortgage-free, making cash available for savings, investments, and renovations.
I appreciate that you enjoy this budget update each month. Still, I 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 to pay down debt and save money.
Monthly Home Budget Actual Expenses
CBB Home Budget Updates Month By Month
In case you missed our budget updates from 2012 to the present, I’ve compiled them on one handy page: monthly budgets.
2020 Home Budget Challenge
July Update: We are still two players for the Budget Challenge 2020.
These two budget challengers will ride it out until the end of 2020.
Let’s 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 our long-term savings.
Hubby says the funds disappear and are never to be seen again! LOL
I tell him he’ll see the money again, but not until we both retire, or I am dead and gone! Hahaha!
Unfortunately, we had no funds left in the kitty to send off this year.
Last month, in addition to the surprise medical expense, we got the spring/summer invoice from our landscapers, and it was DOUBLE what I usually 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 for coverage-related weather staining. The additional labor accounts for our price increase.
This month, the top priority was repaying the funds 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 could get back on a little better financial footing.
On the positive side, I am happy 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 usually are, and that included 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 wasn’t too bad, but it hurt compared to working from home.
I’ve applied for a job with a further drive for me, so if I get that job, that will 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 expensive, but some are 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 than pack food for the drive!
The meh – I had paid for an American event in October, which was rescheduled until next year.
I could leave my money with them and go next year or get my money back.
Sometimes, a little peace is worth the money.