Life is full of surprises, some of which can prove pretty costly. Everything from expecting a new baby to attending your best friend's wedding to buying a new car can have a big impact on your finances and throw even the most detailed financial planner for a loop. Since these one-time expenses can't always be controlled or forecast, here are five easy ways to make sure you have enough set aside for when one occurs.
1. Make a list. While there are some expenses that blindside you, there are many more you can plan for. Start by making a running list of those you're predicting for the next year. If you know the family pet is due for shots in May, or that eye exam is scheduled for June, write it down, along with an approximate cost. Your running list will give you a broader look at how much money you'll need to set aside in the coming months and help you better budget as a result. Some personal finance apps will even do all of the work for you by showing exactly how your spending decisions will affect how much you have left at the end of the month or year. This way, you'll know immediately what you can do today to save up for those one-time expenses that may occur tomorrow.
2. Open a separate savings account. One of the best ways to earmark money for one-off expenses is to open a savings account -- or even multiple savings accounts -- just for these expenses. That way, you can see exactly how much is already set aside and how much you need to contribute to make sure you have the cushion you need. When it comes time to pay the bill, you'll have the money in your account -- ready and waiting. Transparency is key!
3. Sock away that bonus. If you get annual bonuses -- or even a yearly birthday check from your relatives -- hold on to that cash. It can be tempting to spend this money, but bonuses and gifts are a great way to painlessly save for one-off expenses. So the next time your boss gives you a great review and a hefty check to boot, deposit it into your separate savings account and put it toward that car engine replacement or urgent care visit you weren't expecting. Then, if you get a similar bonus next year, use what's left of this year's bonus to treat yourself.
4. Revisit your budget. Use an unexpected expense as an opportunity to take a closer look at your overall budget. Categorize your costs into needs and wants, and find ways to reduce your unnecessary expenses. If you know you've got a doctor's visit coming up in May that insurance won't cover, don't pick that month to make the down payment on your bathroom renovation. Instead, schedule that for another month when you're not forecasting a big ticket, out-of-pocket expense. If you're struggling to keep enough money set aside for these one-time expenses, look for ways to cut back on small frivolities like that daily latte or eating out for lunch. You will likely end up making it a long-term habit and cut them out of your expenditures for good.
5. Find extra income. Consider taking on short-term side jobs or selling personal items to put toward building and increasing your unexpected expenses savings fund. For example, if you know you've got extra expenses coming up, look for extra work the months before that you can do, and set aside the money. Work overtime if it's available, or find a one-time gig, like house-sitting for a vacationing family or pet-sitting. The point is to try and earn the money ahead of time, and put it away so that when those one-time expenses come up, you're not scrambling for cash.
Even on the tightest of budgets, there are easy ways to save for those one-time expenses so you're never thrown for a loop or digging into your emergency fund.
Holly Perez is a consumer money expert at Intuit and mint.com spokeswoman, a leading Web and mobile money management tool that helps people understand and do more with their money.
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