Friday, May 15, 2020

Financial Management - Planning For Big Expenses



Along with an emergency fund I like to have another fund for larger planned expenses.  These are expenses that pop up annually like our auto insurance bill or occasionally like new tires for the truck.  I try to plan ahead and set aside a certain amount each month to meet these expenses.


Planning ahead and setting aside money a little at a time works well so you I don't find myself running on a super thin budget one month or even worse reaching for that credit card.  It also helps me keep my emergency fund intact.  After all, failure to plan does not constitute an emergency.  It simply means I am not better prepared.


If I pay our auto insurance bill, due in November, in full I save a lot of money.  First they offer me a discount for paying it in full.  Otherwise I wouldn't get the discount and if I broke it up into payments throughout the year I would have to pay service fees for the privilege.  Two very good reasons for me to plan ahead and save money all year long so when it is due I can pay it in full.


Vacations are another thing I really enjoy saving up money for.  I found that by tucking aside a mere $35 a month it wasn't long before we had more than enough for our dream family vacation last year.


Whatever the case may be, planning ahead to fund those big expenses will save a lot in the long run.  A lot of money and even better, a lot of stress.


6 comments:

  1. I love the funds! I have a Christmas fund, a property tax fund, a vision and dental fund, a vacation fund, a pest control fund and an HOA fund. They are wonderful things to have when you need them and not difficult to build up every month.

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    1. I find them quite handy. Gives me great peace of mind to have those things planned and saved for. :)

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  2. Thank you fir your informative posts!

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  3. I love it! I use what I refer to as sinking funds ( Dave Ramsey term.) Each month I "sink" funds toward certain expenses. I divide what I anticipate my expense to be by 12 and budget that amount toward the payment. I use this strategy for items such as property tax, professional license renewal, clothing expenses, next set of tires, and car insurance. Like you, I save a significant amount by paying in full. Currently, I save approximately $150 each year on the paid in full discount plus I save that installment fee. I certainly need that money more than the big company.


    Wendy Payne

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    1. I agree Wendy. I'd much rather keep my money than give it to them unnecessarily. I work to hard for it! :o)

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