what to do with annual expenses
Updated: Jul 18
Let’s play a little game of never have I ever. Have you played this game before? It’s a get-to-know-each-other type of game. Player one starts with a statement.
Never have I ever... had an expense that I am used to seeing every year still come up and bite me in the ass when it came due.
If you have had this happen, hand up.
Me:
Everyone laughs, and now you know a little something about each other. Yay! Wasn’t that fun? It wasn’t fun for me. It was my life story.
My prime example is one of my professional organization dues. In addition to money coaching, I'm also a sign language interpreter.
As such, I am a member of both the Registry of Interpreters for the Deaf (RID, Inc.) and the Minnesota RID (MRID)-- being a member of these organizations is a required part of keeping my certification. I love both organizations, but I used to want to yell profanities at them every June when they asked for my collective $300.
Me:
I'd wave my finger at the computer screen... "Now? You want to take my money now?! During this slow time of the year. The audacity!"
The reality was I needed to turn the waving finger around and point it at me. I could only be irritated with myself.
How does that happen? How does an expense that I know about still come out of nowhere?!
Here’s how: I was only focused on the expenses that had to be taken care of each month - I wasn’t seeing the whole picture. It would be like trying to bake a cake, but you only get enough ingredients for one piece. (Maybe that was a bad example because cake never makes you cranky, but you get the point.)
Here is how to fix it!
Create a list of expenses that you pay for annually, biannually, or quarterly. I call it my “Recurring Items.” Here is my list:
January
New Year’s Eve
Cousin’s Bday Dinner Celebration
Car Insurance
February
Taxes
March
Hubby’s Truck Tabs
Hubby’s Bday Celebration
April (nothing)
May
Linus (my kitty) Annual Vet Appt
June
Membership Dues (RID, MRID, Wisc License)
July
Wedding Ring Insurance
Car Insurance
August
My Bday Celebration (I’m big into birthdays… can’t help it. I LOVE THEM!)
September
Carpet Cleaning
October (nothing)
November*
Pontoon Storage
December
Holiday Travel
My Truck Tabs
*You may be wondering… where do I plan for holiday gifts?
Hold tight that will come in another post. Stay tuned!
I put all those items into an Excel spreadsheet:
Cell A1 type Month
Cell B1 type Recurring Item
Cell C1 type Amount
Row 1: Type the months down the row
At the bottom of Column C, I add all those up using this formula:
=SUM(C2:C18)
Note: your second number in that formula may or may not be C18, depending on how many items you've added to your list
In the cell below, use this formula to get the monthly amount:
=C19/12
Then, each month I have a line in my budget titled Recurring Items. That amount is transferred to a savings account and can be utilized as needed.
Voilà! Now I know how much money I need to set aside each month to pay for those items that pop up. Even though I love surprises, these were surprises that needed to be squashed, and now they are. This process was a game-changer for me. I hope it can be for you too!
Here's to you!
Melissa Mittelstaedt
Money Coach (AFC® Candidate)