“It is thrifty to prepare for today for the wants of tomorrow” -Aesop, Writer of Fables
Yearly expenses. They look absolutely huge when we receive the invoice in the mail and if we don’t have the money to pay them, it can be downright scary.
Too many people do not plan for those big yearly expenses.
You know, things like:
- Car registration
- Car insurance
- Association rates
- Insurances
- Christmas presents
And often, people will reach for the credit card and the nasty, high interest rates they are slugged with when they use the card.
If you have suffered the wailing and gnashing of teeth in the past that has come with not being prepared for these yearly expenses, it’s time to get organized. You don’t need to resort to emptying your savings account to pay the bill, relying on credit or living on baked beans and instant noodles for a month. You just need to be prepared and start putting away money in advance to cover the cost of the annual expenses.
Here are our tips to help you avoid getting stung by a big yearly bill you were not prepared for:
- Make a list of all of your yearly expenses: These are things like those we listed above car registration, insurances, rates and Christmas presents. List each of them out and estimate how much each will be. It is better to overestimate than underestimate. Use your last bill as an indicator and add some more to anticipate the cost of your next bill.
- Put away every pay for your yearly expenses: Every time you get paid, put away for your yearly expenses. We recommend you have a useful savings account an account you use simply to cover essential costs. If your annual bills add up to say, P100,000 and you get paid monthly, aim to put into your useful savings account P8,500 each month.
When it comes to insurance, rates and registration costs, you do not have much control over what they will be, however, with things like Christmas presents, you do have control over how much you will spend.
You do not have to go over-board with your spending and we certainly do not encourage it. Be realistic when it comes to budgeting for Christmas gifts. Remember, it is the thought that counts. Make a list of how many people you need to buy for, and set a limit as to how much you will spend for each person. Ensure you do not go over that maximum, and put away each pay for these costs.
Stick to the recommendations we have above, and you won’t ever be stung by annual bills you weren’t prepared for, ever again! It’s so much easier to pay a few hundred dollars each month into a useful savings account, than it is to be hit with a big bill amounting to thousands all in one hit!
The key to staying on top of your annual expenses is organisation. You just need to be organised! It’s well worth the effort and you won’t have to resort to credit or living on baked beans and instant noodles for months!
Helpful Tips for You:
- Make a list of all of your yearly expenses
- Put away every pay for your yearly expenses
- Understand you do not have much control over costs such as insurance, rates, registration, etc
- You do have control over the cost of Christmas presents, so budget modestly and stick to it
Shared by Coach Amos
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Blog by John de Ridder, 0419-427-419, john@focusyourmoney.com.au, Canberra, Australia
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