December is approaching! Spend some time thinking about the annual, one-time bills you'll need to pay in the year ahead.
Here's a strategy for paying your once-a-year expenses: first, add the cost of every annual or quarterly expense you need to pay. Examples include:
- Car insurance
- Property taxes
- Tuition, books or other school-related costs
- Homeowners or renters insurance
- Life insurance
- Car registration renewal
- Charitable donations
- Quarterly taxes (if self-employed)
Total the sum of all of these. Add an additional 10-15 percent to account for unexpected cost increases. Then divide that sum by 12 months, 52 weeks, or by your annual number of pay periods (e.g. if you get paid every two weeks, you have roughly 26 pay periods). The answer shows you how much you need to set aside regularly.
For example, if all your annual bills total $4,000 per year, you get paid every two weeks, and you want to set aside money from each paycheck, you'll need to save $4,000/26 = $153.84 from each paycheck to cover these once-a-year expenses.