It has happened to all of us at one point or another. You’re sailing along, sticking to the budget you carefully crafted for yourself. Then you’re suddenly hit with an unanticipated one-time expense that completely derails everything for which you worked so hard.
You shed a few tears as you say goodbye to a large chunk of money for which you had other plans and wonder where things went wrong.
The truth is, most “unexpected” one-time expenses are things for which we can plan. Birthdays, anniversaries, holidays, vehicle registrations, and baby showers are usually set in stone or scheduled ahead of time. We just happen to forget about them.
If you’re not one for planning, or if you’ve been burned by one of these expenses before, here’s how you can budget for them.
First, Figure Out Your One-Time Expenses
This requires some upfront work, but once it’s set, you can forget it until you need to add in something else or take out something.
Do you have important events saved to the calendar on your phone? Or do you still keep a paper calendar? Go through each month and write down the “special events” for which you need to budget, and how much you need to budget for them.
For one-time expenses that aren’t necessarily worthy of a calendar reminder, take a look at the expenses you incurred last year if you have the records available.
Include things like routine maintenance, vehicle inspections, and registrations, insurance premiums, dental cleanings, checkups (for yourself, family, and pets), taxes – anything you remember forgetting about last time around.
Add a “One-Time Expense” Category to Your Budget
Once you have the list together, incorporate these expenses into your budget. Add in a “one-time expense” category, and if possible, make note of its purpose.
Doing this creates a template for next year’s budget, and you can easily make changes if needed. You won’t forget to budget for an expense as long as it’s in there.
Bonus tip: if you budget with your partner or spouse, have them review your list to make sure nothing is missing, especially if they’re the better planner.
Make Saving Easier – Budget for it Monthly
Some people prefer to budget in the savings for major one-time expenses instead. For example, say your car insurance premium is $600, and it’s due twice a year.
You’d need to save $100 per month ($1,200 / 12) to have the savings by the time it’s due. Simply build $100 of savings for this expense into your budget each month so you can be prepared.
This makes it easier to save for some of the larger one-time expenses since you won’t have to figure out from where you’re going to get $600. It will already be there!
Create a Separate Savings Account
You need a place to keep this money, which is why I recommend creating a separate savings account for one-time expenses.
Technically, these expenses shouldn’t be classified as “emergencies” since you can plan for them. You shouldn’t be taking money out of that fund to pay for a birthday gift. You’ll regret it when you get a flat tire the next week.
If you’re able to set up multiple savings accounts, that’s even better. Create an account for gifts, insurance premiums, medical expenses, taxes, etc. Set up an automatic transfer from your checking account to these savings accounts once per month to fund them. You can use the numbers you got from the previous strategy to do this.
Don’t Let One – Time Expenses Catch You by Surprise
Plotting these expenses out and figuring them into your budget means you won’t be caught by surprise next time around. This can relieve a lot of financial stress come the holidays, or any time when you might get hit with multiple one-time expenses (car registration + insurance isn’t a good combination, trust me). Don’t let these one-time expenses get the best of your financial plans – prepare today.