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I have a solid monthly budget, but I'm noticing that every few months a significant expense is needed (car tabs/registration, identity protection service, precious metals account fee, a trip to see family, gifts for birthday parties, etc.) When expenses like this show up, my projections for paying off debt, saving for a house, etc. get thrown off.
Is there a better way to budget for this other than just having a monthly "random" line item for non-monthly expenses?
Is there a better way to budget for this other than just having a monthly "random" line item for non-monthly expenses?
I think so.
car tabs/registration,
You know this is going to happen, so increase your Car Maintenance/Repair budget line item by the relevant amount divided by the average number of months between these "random" expenses.
identity protection service,
Yearly subscription renewal? If so, then see above. I have a "Recurring non-monthly expenses" line item for stuff like this.
precious metals account fee,
See above.
a trip to see family,
Take it from your vacation fund, which you might need to increase contributions to.
gifts for birthday parties
I have a "Christmas Club" line item, which, despite the name, is also for birthdays and random other gifts.
Expenses crop up at different frequencies, but in my experience, the lowest frequency for most recurring expenses is annual. (Some subscriptions can go multi-year, but there’s often an annual option as well.)
Some annual payments can be split up into monthly payments, but for others like car servicing, it’s not practical.
One way around it is to create a monthly budget as you’d normally do, then copy it for each of the 12 months, and add the extra bits into the appropriate month’s budget. It may help to maintain a buffer in your savings to smooth over the lumpy months.
If you want to have a single monthly budget to track and to have more even expenses each month, divide each annual payment into monthly amounts. Save up monthly until the funds are needed. It may be useful to keep a list of the months and amounts of the annual payments.
None of the mentioned items are something I would consider unexpected. You need to increase your automotive budget and plan for known events like birthdays, holidays, etc.
Look into sinking funds to earmark money for larger purchases. I've included a great resource about the details of a sinking fund.
Some of those expenses are not random but very predictable, and they are certainly different categories and need to be handled differently.
car tabs/registration, identity protection service, precious metals account fee
The fees for these can be predicted, and you know the date. Adding to these types of expense are annual fees of any sort Amazon Prime, life insurance, and property taxes come to mind.
For these kinds of expenses you need a sinking fund. Add the total cost of all these items and divide either by month or by paycheck. Then budget to set aside the appropriate amount to make sure you have enough funds to cover each expense. When the expense come due pay it out of this fund. Now, when you first start, you may have to dip into other savings to cover fees, but within 6 months or so, it should all be square.
gifts for birthday parties
Some birthday parties are predictable and can be added to the fund talked about above. Others are not and you need to have a different line item. We have a Misc Spending line item that has a decent amount dedicated to it each month.
projections for paying off debt, saving for a house
Given this fact, I would advise against having a Misc Spending line item, or keeping it very low. We are in a much different place financially and when we did have debt we did not have such a line item.
When I was in your shoes, I worked extra and squeezed every nickle out my income to pay off debt. It is very difficult to wander out of debt, you have to be intentional and focused. A few areas that I would recommend cutting your budget from your short post:
