The scenario: You have just polished off the last of your paycheck. You go to the mailbox and your semi-annual car insurance payment is due, and you just realized that your favorite nephew’s birthday is next week. What do you do? Panic!

Many times when we figure our budgets, we forget about those things that only come up once, twice, three or four times a year. Well, there is no reason to have to panic when these times come.

The formula to ward off panic

List out any expenses that come around only a few times a year. Here are a few suggestions that may apply to you:

• Real estate property tax
• Home owners insurance
• Auto insurance, or other insurance premiums
• Regular subscriptions and dues
• Doctor or dental checkups not covered by insurance
• Car tags
• Termite bond and/or pest control fees
• Birthdays
• Christmas

Once you have listed these items determine and jot down approximately how much each one will cost you during the course of a year.

Divide your total by the number of paychecks you receive in a year: 52, 26, etc.

The amount that you come up with is how much you should take out of your paycheck each pay period. Then, put this money into a special savings account specifically to pay for these items when the time comes.

Now, I know that this may sound like a lot of money to take out of your check and put into savings. But, remember, you have to come up with the money regardless, in either smaller increments over time or in a large lump sum at once. Which sounds more logical?

By using this method, you will be able to remain completely calm when those, once unexpected or forgotten, bills come in the mail. Plus this will keep you from having to put Christmas, birthday gifts or any of those other expenses on your credit card.

It’s all about thinking and preparing ahead.

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Posted on April 4th, 2009 in Money Matters | No Comments

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