Everyone knows the importance of having emergency savings. If something unexpected comes up, having a chunk of money in savings can be the difference between continuing life normally versus going into debt. Planning ahead for periodic expenses is just as important because it can be really difficult to come up with a couple hundred dollars for something at the last minute…even though you knew it would be coming up. Think about all the different expenses you may have that you don’t pay for monthly and start setting aside money into a periodic savings account as soon as you can.
Estimate car repairs and maintenance for the year based on your car’s age and how much you drive it. Don’t forget about vehicle tabs/registration or driver’s license renewals.
This one may be a little more difficult to predict, but do your best to determine how much you might spend. If you have Flexible Spending Account for medical, be sure to choose a realistic amount, being careful not to overestimate if yours has a use it or lose it policy.
Take inventory at the beginning of the year on what you might need to fix or replace: think roof, appliances, and general upkeep/maintenance.
Think about all the cards and/or gifts you purchase every year…birthdays, Christmas, weddings, etc.
Do your best to determine what you normally spend on clothes, jackets, shoes, etc. in a year. Be sure to check if you need to replace the more expensive items like winter coats and boots.
Don’t forget about expenses for your children…sports, field trips, and other school-related activities.
The bigger the expense, the sooner you should start setting aside money. Try to put it in a separate account from the one you have for everyday use and separate from emergency savings. The more money you have in savings for these expenses the better off you and your budget will be.
For more information about savings, read Savings 101: Emergency Savings vs. Periodic Savings and 4 Tips to Save Like a Pro.
If credit card debt is preventing you from building up savings, a Debt Management Plan might be just what you need to help pay off your debt in full for good and in 5 years or less. Click ‘time to start’ below or call LSS at 888.577.2227 for your free and confidential session. Our financial counselors will help you create a realistic plan of action to conquer your debt and achieve your financial goals.
Author Elaina Johannessen is a Program Director with LSS Financial Counseling.