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budgeting for irregular expenses

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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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7 comments for “budgeting for irregular expenses”

  1. I love automagical.

    And I love budgeting :)

    I am not nearly as good at it as you yet though. I am learning!

    Posted by paidtwice | September 11, 2007, 6:18 pm
  2. For me, it has to be automagical or there is a great likelihood of it going wrong and bills being unpaid.

    Posted by plonkee | September 11, 2007, 6:48 pm
  3. I just started doing this and so far it’s working great! :)

    Posted by Chief Family Officer | September 12, 2007, 12:21 pm

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