Do you save up for certain expenses ahead of time? Or do you consider it an unnecessary hassle and resort paying for things as they come up? I’m very Type A meaning I thrive on organization, have several backup plans, and practically freak out a little too much about certain things.
When it comes to your finances, I think everyone can stand to be a little Type A and prepare for certain expenses that they know are coming up in the future. It makes things easier later on in case your situation changes and it also helps you feel more in control of your money.
Here are 3 expenses you should try to prepare early for each year.
1. Holiday Shopping
There are several holidays throughout the year, but we all know the most expensive one is Christmas. While I try not to do a ton of shopping anymore, I still like to buy gifts for a few people in my family and my son always has his eye on something. Therefore, it’s safe to say, November and December are pretty expensive months in my house. If you agree, you may want to start setting aside money for the holidays early on so you won’t have to stress when the time comes to spend it.
Set a rough Christmas budget based on your spending expectations and how much you can afford. Then, start saving a fixed amount several months ahead of time. You can even accelerate your savings as you get closer to the holidays. I started saving for Christmas in July last year and I started by setting $50 per month aside, then I increased it to $100 per month, and $200 after that.
It was nice to not have to stress during the holiday season which can be stressful enough. If you want, you can even get all your shopping done early to avoid the crowds. Having the money saved up opens the door for many possibilities.
2. Back-to-School Expenses
Back-to-school season can be a nightmare for parents who are unprepared or need to purchase several new items for their kids. Similar to when holiday season comes around, I’d rather not have to deal with the store traffic so I actually try to purchase as much as I can before August.
If you’re looking to save up for this expense though, estimate how much your child will need in terms of clothes, shoes, a backpack, and supplies and do a combination of purchasing items early and saving up in order to take advantage of sales. Even if the school supply list hasn’t been released yet, it’s easy to determine what types of basic supplies your child needs like paper, pens, pencils etc. See if your child can reuse his or her backpack for another year.
With shoes, try to take advantage of bogo deals when the time comes and for clothes, see if you can purchase them a season early. I actually scope out the sales right before spring because I know fall and winter clothing will be marked down so I buy a larger size that I can use for the following year. Saving up for back-to-school expenses right after the school year ends is a great way to keep your spending in check and obtain everything your child needs to attend school for another year.
3. Fixed Annual Expenses
If you have annual expenses like car insurance, car maintenance, life insurance premiums, membership fees, credit card fees, and even taxes, you can save up for them in advance so it doesn’t seem like your budget is taking a huge hit when they’re due.
You don’t want to deal with a financial emergency and a ton of annual expenses during the same month but it can very well happen. If the expense is over $75 per year, split it up into 12 months and set a portion of it into a savings account each month until it’s due. This strategy may not even add much more to your monthly budget.
You can label each savings contribution or use separate accounts to stay organized. I like using Capital One 360 because it allows you to open up to 25 different savings accounts and name them to keep organizes. Either way, paying for these annual expenses ahead of time will provide you with so much more peace-of-mind.
Do you save up for any annual expenses ahead of time or do you have another strategy you use for handling these expenses?