Do you know that feeling? It's mid-month, and you're feeling good about your budget. You've managed your expenses well, even saved a little something for that movie night, and then, out of the blue, your yearly Amazon Prime subscription is up for renewal. Suddenly, your well-planned budget is in disarray.

– those pesky bills that don't occur monthly but can throw your budget off track when they do appear. But worry not! With some extra planning, you can learn how to budget for periodic expenses effectively and never be caught off guard again.

What Are Periodic Expenses?

Periodic expenses are bills that don’t appear every month, making them easy to overlook. They might occur semi-annually, quarterly or annually, and can include costs such as:

• Insurance premiums (home, car, life, etc.)
• Property taxes
• Warehouse memberships
• Yearly subscriptions (magazines, apps, software)
• Gym or fitness memberships
• Tuition payments
• Gifts (holidays, birthdays, anniversaries)

While they may seem to pop up out of nowhere, they're inevitable. So, it’s only wise to include them in your budget categories.

The Magic Tool for Managing Periodic Expenses: Budgeting

Once you have identified these sneaky expenses, it's time to plan for them, and there is no better tool for this than budgeting. Here’s a proven method to budget for periodic expenses:

Step 1: Make a List

Start by noting down all the pesky costs that don’t appear in your regular monthly budget. If you can't recall them all, you can check your past bank and credit card statements. You can also use budgeting apps like Lunch Money, which auto-detect non-monthly periodic expenses over time.

Step 2: Do the Math

Once you've listed all of your periodic expenses, add them up to find your yearly periodic expenses.

Step 3: Divide it Up

Next, divide your yearly total from step two by 12. This will give you the monthly amount you should set aside for periodic bills. If you budget biweekly, divide it by 26 instead of 12.

Step 4: Create a Sinking Fund

A sinking fund is a specific account you use to save for future expenses. Once you know how much you need for periodic costs throughout the year, you can allocate a portion of your income to your sinking fund each budgeting period.

Example of Budgeting for Periodic Expenses

Let's say you have the following yearly periodic expenses:

• Annual subscriptions: $150
• Kids’ sports: $350
• Gifts: $500
• Car maintenance: $800
• Property tax: $3,000

Total = $4,800

Now, divide your yearly total of $4,800 into 12 months or 26 fortnights.

$4,800 ÷ 12 = $400

OR

$4,800 ÷ 26 = $184.62

So, you'll need to set aside $400 each month or about $184 every other week for biweekly budgeters.

Should You Include Periodic Expenses in Your Budget?

Absolutely! By learning how to budget for periodic expenses, you’ll gain a clearer view of your spending and never have to panic again when those annual or quarterly bills pop up. Remember, budgeting is not about restricting your spending but about making informed decisions on where your money goes.

So, go ahead, add a special budget category for periodic expenses and say goodbye to surprise bills. Happy budgeting!