plonkee money an english-er's thoughts on personal finance

September 10, 2007

budgeting for irregular expenses

Filed under: budget — plonkee @ 12:00 pm

I’m sure lots of people use this method of budgeting for irregular expenses, but when it was first explained to me (by crochetaddict on organized home) it was a revelation.

All you do, is add up all the irregular expenses that you will have over the year, divide this sum by the number of paydays in a year, and save this amount from each pay cheque in a separate account, then just pay the bills as they come up from this account. It isn’t foolproof, there can still be cash flow issues, so it helps if, when setting this up, you can feed the irregular bills account with a bit of starter money.

I love this method because after using it for a couple of years, I know that I always have the money to pay the tv licence and the house insurance, and enough to buy Christmas presents. And its automagical.

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