How to budget for non-monthly expenses

[corn18]

Trying to get my budget in order. There are several expenses that are not monthly: quarterly local taxes, car registration, dog dentals, gifts, vacation, summer camp, etc... Right now I just total them all up, divide by 12 and then put enough away in savings each month to cover them. This savings account goes up and down depending on when the expense hits. I like this approach as I can pay regular monthly expenses from my checking account and then I pay the periodic expenses from the savings account. This gives me a fairly flat and consistent monthly expense picture.

Is this the right approach?

Tom

[creditcardfree]

Yes, that is how I have been taking care of those expenses for years. Some people may need to start with a cash cushion if their first bill may not be covered by the amount they have set aside.

[MonkeyMama]

Yes, this is what I do and it is very simple and effective.

[JustBill]

Yes this has worked well in our situation. Heck, in the good old days of 5% online bank interest rates, interest earned would even help offset most moderate increases encountered for most of these types of expenses. Not so much anymore at .0000000000000001% APR.

[corn18]

Thanks everyone.

[TheKayla]

Absolutely, that's exactly what you should be doing. I do an even simpler approach and throw a few hundred in my savings or checking here and there and keep a larger cash buffer in my checking. It works well for me because I prefer simplified finances and don't tend to have as many irregular expenses as I'm single with no kids and live in an apartment. I also have a more irregular income, so its perfect for me. The most important thing is to do what works for you, and if it is working -- great -- if you come up short every now and then, then adjust and keep with the process.

[marvholly]

I do exactly the same thing except:

Deposit into a money market account (HIGHER interest)
i can directly write a check for the bill (limited to 6/month)

[Deteria]

I generally calculate out all of my expenses and subtract it from my income. I will have a leftover amount of cash in my CHECKING account. I would say the smart thing to do is to set an $XXXX amount to auto deposit into SAVINGS. If you have any leftover $ after that transfer into SAVINGS, use it as a cash cushion for other expenses during the month, be it for entertainment, fun, or car maintenance, etc...

If after a few months, and the cash cushion is building up, I'll deposit some more of it into my savings.

[ProjectDebtRelief]

I think this is a solid approach since you know when you'll have to pay the expenses throughout the duration of the year.

[scfr]

There is more than one approach, but since the one you are using is working for you then it absolutely is "RIGHT."

Where people go wrong is not in the approach they use, but in failing to account for and expect irregular expenses.

[corn18]

Where people go wrong is not in the approach they use, but in failing to account for and expect irregular expenses.

That was me.