How do you budget for expenses that aren't monthly?

[ilovemygirl]

How do you put annual or occasional payments that need to be made into your budget? For example, we pay for an extracurricular class for dd every other month and my renters insurance needs to be paid in full once a year.

Do you break up things like that into whatever the monthly payment would come to or do you leave it out of the budget completely on months it's not due.

We pay the money the second way and don't have sinking funds but I think it's making dh think there is more money than there is on months that certain items aren't due. 

Am I even making any sense? What's working for you and why? 

[crazyms]

I would suggest making a list of your yearly expenses (the property tax, car tags, etc all that stuff that only happens once a year or you pay at one time) and then divide it by 12 so you have a monthly rate for your yearly expenses. That way you can put it in your monthly budget.

As for dh thinking there is more money than there is I've had that issue too. My dh can look at the bank account and say oh cool we have $2200 where that is really for bills and expenses. He'll act shocked that we have *so much money* but I'm telling him no about buying something. For a while we kept a separate account that I would transfer gas money and his spending money to so that he didn't get over excited for nothing lol. It was much easier to deal with when he only saw a few hundred dollars.

[kristandthekids]

What crazyms said. I have a subscription that I pay every 3 months. I divide that payment by 3 and set that much aside each month so it's there for it comes time to pay it.

I do keep a separate savings account just so there no 'oops's. And if I end up not having to transfer money out for the bill because there's room for it that month, bonus.

[seashells]

Yes, we have sinking funds.

Every month, I pay into the funds. If it's a yearly expense, I pay 1/12th a month; a quarterly expense gets 1/3 a month, etc.

I use an Excel spreadsheet to track it, and I put the money in an ING account dedicated to sinking funds.

[Tilia]

I used excel to set up a budget every month.  Each month it is slightly different.  I set it up based on my paychecks, by date.  For example, 1st paycheck I pay my car and renters insurance, 2nd paycheck I pay for the internet.  Certain months have more bills, such as November I pay my car tags.  And each month has fixed bills such as rent, daycare, preschool, groceries, etc.

[Carson]

Originally Posted by seashells 

Yes, we have sinking funds.

Every month, I pay into the funds. If it's a yearly expense, I pay 1/12th a month; a quarterly expense gets 1/3 a month, etc.

I use an Excel spreadsheet to track it, and I put the money in an ING account dedicated to sinking funds.

Yes to this - I escrow to myself for taxes & ins, car repairs, pet vet visits and home repairs.  It's a fixed monthly amount.  When something comes up, I just transfer that money over to my regular account. 

 

[SundayCrepes]

I list all my transactions in quicken (I pay mainly by debit card, but if I get out cash, I categorize where the cash went to.) I have been doing this since 1999. I can look at reports and graphs of where my money is going.

I make "fake" accounts in quicken. Each month I contribute 1/12 of an annual expense--membership to Costco or the Botanical Gardens or property taxes or whatever. When the payment is due I take the money out of the fake account and pay for it out of the main account. (If that makes sense.)

I also have a spreadsheet where I list my monthly budget. All my fake accounts are part of the budget. I recently had to redo the budget. We hadn't done it since Sept. 09. I just took how much I spent on each category (hygiene products for example) during all of 2010, divided the amount by 12 and that was my monthly budget amount. (Although some areas I had to cut back on because other areas, such as utilities, had gone up and income had not.)

For some expenses, such as insurance, we have the money taken automatically out of our account each month. By paying monthly, we get a little price reduction. Although some places charge more if you do that. We keep a separate bank account for everything that is automatically paid AND we pay our utilities on the budget plan so  we pay the same amount each month. I know how much money to put into this account each month so we are never short for our utilities or mortgage. Also, by having a separate account we don't have to worry about a company having access to an account with all our money. I almost never have to pay a bill having done this. (more info than you asked for, but I thought I'd share.)

[Denvergirlie]

Originally Posted by seashells 

Yes, we have sinking funds.

Every month, I pay into the funds. If it's a yearly expense, I pay 1/12th a month; a quarterly expense gets 1/3 a month, etc.

I use an Excel spreadsheet to track it, and I put the money in an ING account dedicated to sinking funds.

Me too, this process works great!

i also have sinking funds for things like vacation, car repair, car replacement, furniture replacement, and household repairs/ projects/ tools. I send a specific amount from each of these catergories monthly to a separte ING account. When it's time to pay the bill, just transfer "x" amount of dollars back to checking account. It's no longer in the main account, but still easily accessible and gains interest to boot! 

[colsxjack]

For those of you with sinking accounts, do you add up all your irregular bills and divide it and then put the money into one account?

What do you do for bills/expenses that are more irregular and not a fixed amount? Say a repair to a car or roof?

What do you do for vacation savings and stuff?

Do you have more than one saving account and divide all the types of savings up or do you put it into one account and just pay whatever comes up out of the account?

We are new home owners. We have some debt, mainly student loan and a small cc debt that will be gone in 2 months. We have good income but live quite frugally and currently the ability to "save" quite a bit of money each month.

But we also have some expenses coming up, some needs and some wants. We own a fixer-upper house and want to do some repairs and renovations but also know needed repairs will come up in the future. We want to go on a vacation. We want to have another child and save for maternity leave top-up (we are in Canada and get 1 yr, but only at 55% income). We want to make at least one extra payment on our mortgage each year. Stuff like this. 

We already budget the regular monthly and bi-monthly expenses. We pay our student loans and put money aside in a retirement fund and an education fund for our DD. We still have quite a bit left over and want to do right with that money. We live quite frugally and do not feel at all deprived in doing so. We are one the same page. But it just seems confusing having  a sinking account, a home repair account, a vacation account, etc.

Currently we have one joint chequing account. And we have 2 ING savings account. One for short term savings and one for long term savings. We are unsure what we consider long term savings and short term savings. For the time being, we have more money than we have to spend, so it hasn't been an issue. We just take whatever we need out of the short term savings. But we both feel it is time to really get a handle on it and take advantage of being in a place in life where we have ample excess money left over each month in our budget. As we have more kids that may change.

Sorry if this is considering derailing the thread. I can move this to its own thread if that is appropriate.

edited to add: the cc debt will be gone in two months. The student loan debt will be around for a couple/few more years. It is not very high interest.

[SundayCrepes]

Originally Posted by colsxjack 

For those of you with sinking accounts, do you add up all your irregular bills and divide it and then put the money into one account?

What do you do for bills/expenses that are more irregular and not a fixed amount? Say a repair to a car or roof?

What do you do for vacation savings and stuff?

Do you have more than one saving account and divide all the types of savings up or do you put it into one account and just pay whatever comes up out of the account?

We are new home owners. We have some debt, mainly student loan and a small cc debt that will be gone in 2 months. We have good income but live quite frugally and currently the ability to "save" quite a bit of money each month.

But we also have some expenses coming up, some needs and some wants. We own a fixer-upper house and want to do some repairs and renovations but also know needed repairs will come up in the future. We want to go on a vacation. We want to have another child and save for maternity leave top-up (we are in Canada and get 1 yr, but only at 55% income). We want to make at least one extra payment on our mortgage each year. Stuff like this. 

We already budget the regular monthly and bi-monthly expenses. We pay our student loans and put money aside in a retirement fund and an education fund for our DD. We still have quite a bit left over and want to do right with that money. We live quite frugally and do not feel at all deprived in doing so. We are one the same page. But it just seems confusing having  a sinking account, a home repair account, a vacation account, etc.

Currently we have one joint chequing account. And we have 2 ING savings account. One for short term savings and one for long term savings. We are unsure what we consider long term savings and short term savings. For the time being, we have more money than we have to spend, so it hasn't been an issue. We just take whatever we need out of the short term savings. But we both feel it is time to really get a handle on it and take advantage of being in a place in life where we have ample excess money left over each month in our budget. As we have more kids that may change.

Sorry if this is considering derailing the thread. I can move this to its own thread if that is appropriate.

edited to add: the cc debt will be gone in two months. The student loan debt will be around for a couple/few more years. It is not very high interest.

As I posted earlier, I track my finances in quicken. Before I did that, we had several checking accounts (and a savings acct associated with each checking.)

Budget account--this is for automatic withdrawals for mortgage, utilities, cell phones, insurance, etc. (Back when I was working our IRA withdrawals came out of this account.)

Life account--we pay for all household stuff out of here. Groceries, dog food, chicken food, toilet paper, shampoo, dining out, dentists, prescriptions, etc.

My account--I get a small amount to do with as I wish. I can buy a brownie, get a massage, buy a premium cell phone, whatever I want and my husband has no say in it.

My husband's account--his money, just like mine.

Kid account--all kid related expenses (except medical, groceries, hygiene, etc. Those come out of life.) Clothes, BMX fees, homeschooling supplies, snacks from the drive-thru, shoes, toys, art supplies, etc.

Payday account--Our paychecks go in here then the bank automatically transfers a set amount into all the above accounts.

Once I discovered quicken, I realized I could have done all the above without having so many checking accounts, but I actually like having all the separate accounts. It's just easier for me.

Anyway, for things like roof savings or car repairs or vacations (not so many of those on one income) we put all the money into a money market acct because it earns more interest. Then on quicken I have fake accounts (as I mentioned before.) So quicken will automatically transfer money out of the money market account into the roof savings account. No money left the real bank, but I know how much money we have alloted for roof repairs.

We also do this in the other accounts. My account, my husband's account, and the kid account all have small deductions for clothes. We only shop for clothes a couple times a year, but when we do there is always a chunk of money because we've been putting away a little twice a month. My husband goes canoeing so he has an account for trip expenses. We each put away a little for our anniversary trip. In the kid account we put a little aside for activities. Also for toys. And shoes. And other stuff.
 

[kkfum]

My budget (in Excel) is very detailed...I divide fixed expenses that are yearly or quarterly into monthly payments and put them in what I call a "recurring" payments (probably not the right word, but I know what it means) account at the end of every month they are not due (car insurance, life insurance, phone/internet bills, etc.). Monthly payments that change are also budgeted for, including things like car maintenance, car repairs, house repairs, groceries, household good, personal goods, etc. On the months when I go under budget for these line items, all of the money left over goes into the recurring payments account, as well. Then if I ever have a month where I go over or where a yearly or quarterly payment is due, I can take directly from this account and not touch savings. I keep up to $1K of the recurring funds in a savings account linked to checking. The overage goes into an ING account.

I actually have 5 or 6 different accounts at ING right now...I think you can have as many as you want and it's easy to add new ones. I believe my current accounts are: Savings, Car Payoffs, Taxes, Kids (I save birthday money since they're still little for things I need to buy for them), Vacation, and Recurring Payments. As for how much to save towards things like Vacation, Remodeling, etc. that's your call. You can make a priorities list, discuss how financially secure you feel with your current savings plan, and then come up with a savings plan for these items.

I also have the benefit of a DH who doesn't like to look at the finances and doesn't like to spend money, either. :)   We always discuss any major purchases, so I'm never worried about spending more than is in the checking account.

[seashells]

I only use one account for sinking funds, personally. I use Excel to track the money I put into it, so every penny is allocated to this or that sinking fund.

I do also have nonfixed sinking funds. Car repair, yes, also a fund to save up for a new car in the (knock on wood) distant future when this one dies, home repair (and yes, I have the amount for a roof in mind, but I haven't saved anywhere NEAR enough for it yet, but that's also a distant item). We don't take vacations per se, but my annual visit to my mother is in there.

Even though it's one account, I don't "just" pay for whatever it is out of the account. If I have a car repair that's $400 and I only had $350 at the time, then I'd take $350 out of the account and cover the rest under my regular monthly cash flow. You can do whatever you want, but I prefer to do it this way because that's how I can track how much I have for every single fund. Some funds I won't touch until I have enough (saving up for some paint and stuff for the bathroom, for example) and if I just dump it all into an account and don't track what I have for what, then I would never know if I had enough for anything. Even stuff that is not elective, like a car repair, I feel better knowing "hey, we covered 100% of that one" or "we caught all but $50, not bad" than just taking it out of the account and not having a clue whether the car repair meant that we would not have enough when the life insurance came due, or the car excise tax, etc.

We don't have a sinking account AND a home repair account AND a vacation account - those are the sinking accounts.

Some people have a bank account for every sinking fund, and that's very legit. I don't because I have 17 sinking fund categories and I just think it's a waste to spend all that time transferring in and out of that many accounts when I can just record it all on a spreadsheet and be done with it.

If you would rather just have an account and not track it and just use it to withdraw from whenever a qualifying event comes up, that already puts you ahead of many people. Whatever works, right?

We used to call our stuff short term and long term savings too. But now we changed to sinking funds and emergency fund.

Sinking funds are any predictable expenses. They include things we know for a fact we will spend (life insurance premium, for example), plus some things we can predict we'll probably use sooner or later even if we hope we don't (car repair, medical deductible). It even includes a couple things we just plain want (saving up to paint the bathroom and put some new towel bars and stuff in). In any event, we expect to spend them at some point or another, and I've worked hard to make sure I have planned to catch pretty much any contingency (the funds are not nearly funded enough but I'm working on it). This is money meant to be spent, and I don't feel bad about withdrawing from it.

The emergency fund is the last ditch thing that covers only emergencies. Since I can predict our car may need repair at some point, I don't consider it an emergency, so I have a sinking fund for that. The goal is to not touch this fund, but it's there if we need it. Job loss would be one reason to touch it. Or other scenarios I can't think of or don't want to. This is "in case of emergency, break glass" kind of money. 3-6 months living expenses is the recommendation. I've built it up to 2 weeks, sigh, but I'm working on it.