Do you have certain times of the year that just seem to KILL your budget? You paid to register the car, but now you don’t have money for groceries? I think everyone has been there. Because I am a Certified Public Accountant, people often ask me for financial advice. They want a magical solution that will help them manage their finances so they don’t feel so strapped all the time. While I am not magical per se, my suggestion is always to start with a little discipline and a revolving savings account.
You will have to work on the discipline yourself, but I can help with the concept of the revolving savings account. The things that seem to wreck our budgets all the time are the things that don’t come up every month. Most people remember to include food, housing, utilities, dance lessons, etc., etc. in their budgets. Things that happen every month are right in front of us as we make our budget list. The things we forget are things like birthday outings and gifts, car registrations, school registrations, dance costume fees, school clothes, etc. Those things can sneak up on us. Here is the solution.
Add up all the things that come up in your year that don’t come up every month. Some ideas are:
Obviously these are just ideas. You will have to rack your brain for items like this in your own life. Once you have your total, divide the whole thing by 12. In this case we would get $4,350/12= $362.50. Next, take the $362.50 and put it in your monthly budget. Every month, have that amount go to a separate account (checking or savings-depending on how you want to run it). When the non-monthly items come up, the money is already there- just like magic! I would suggest setting up an automatic transfer and starting with a little bit of money when you start the account- especially if your larger items will come up in the first month or two. After that, the account will replenish itself.