by Maurie Backman | April 18, 2021
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It takes careful planning to cover these significant costs.
We all have monthly expenses our paychecks need to cover -- things like rent or a mortgage, food, and utilities. I don't save up for these recurring expenses -- I just make sure to keep them low enough that my income can take care of them. But I do have certain expenses I need to save for month after month, like these.
Summer camp isn't just an indulgence for my kids -- it's my ticket to being able to do my job all summer when school isn't in session. But in my neck of the woods, a full-time camp program can easily run $4,000 per child. And trust me, these aren't high-end camps -- that's just what it costs. Normally, to pay for camp, I put down a deposit of about $500 per child many months in advance, but I then need to pay the balance in full around April or May. And that's a lot of money to come up with on the spot. As such, I make sure to set funds aside for camp all year round.
I pay my annual homeowners insurance bill all at once. Doing so saves me a bit of money compared to the cost of making monthly payments, which come with a modest surcharge. But at a price tag of over $1,000, that's not something my regular paycheck can handle, so I save for it throughout the year.
The amount I wind up spending on the holidays varies a lot from year to year. It hinges on factors such as whether I'm traveling to see family, if I'm hosting an event, or if I'm simply showing up as somebody else's guest. But each year, I typically plunk down a minimum of $1,000 on holiday gifts alone. (In addition to exchanging gifts with extended family, I like to give gifts to my children's teachers, babysitters, and extracurricular instructors, so it really adds up). And once again, I have to sock money away month after month to avoid holiday debt.
All of the above expenses have two things in common -- they pop up once a year, and they're costs I can anticipate. That's why I make a point to work them into my budget. That way, I can consistently set funds aside for these costs during the year so I'm not left scrambling when they actually come due.
Planning for these expenses also helps me avoid racking up debt -- and paying interest that makes those bills cost even more. That's why it pays to create a budget if you haven't set one up yet. But when you do, be sure to account for those one-off expenses that could really eat into your income. A good bet is to look through your bank and credit card statements from the previous year to identify those various one-off bills. Doing so could spare you a world of financial stress -- or at least that's been my experience.
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