Hi Reader!

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Last week, I talked about the advantages of naming your savings to help achieve your dreams. While building savings buckets for dream trips and big goals are fun, you can use that same power of naming your savings for the everyday, predictable-yet-unpredictable expenses that life keeps throwing at us.

Long-term, irregular expenses can quietly derail even the best budgets. So we save for them. But how much do we save? When should we take money from savings, and for what? Subdividing your savings into buckets instead of just one lump of money helps you quickly and easily answer those questions. Decided on what to set aside, divide by 12, and put that into a dedicated savings account every month for each category. When the expense arrives, the money is already waiting.

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Here are some typical examples

🏠 Home Sweet Home

A good rule of thumb is to set aside 1–4% of your home's value each year for maintenance. That can seem like an impossibly large number, but think about how many big-ticket items are in your house: appliances, utilities, roofing, siding, and all the regular upkeep that comes with homeownership. And that's before any upgrades or improvements. Set aside funds for yearly home maintenance, but let the leftover roll over every year. It will grow over time, and you'll never be caught off guard with a broken furnace or melting freezer again.

🚗 Vroom Vroom

Cars are often our next biggest expense. Beyond your car payment, owning a vehicle comes with a steady stream of costs: registration, taxes, insurance, oil changes, new tires, the occasional cracked windshield, or unexpected repairs. Put aside $75-$200 a month per car, depending on the type and age of your car. The older the car, the more you'll want in reserve.

🎄 Fa-La-La Holidays

Seasonal and holiday spending is one of the most predictable expenses we somehow still get stressed over every year. Figure out what you typically spend based on how many gifts you give, if there are extra dinners or parties that you usually go to, or any extra experiences and traditions you will need to pay for. Put away a little every month towards that goal, and you will have a fun-filled, guilt-free holiday season.

🩺 Call the Doctor

Medical Expenses are usually completely unexpected and can be very expensive. Depending on your insurance, you may have deductibles or copays, or out-of-network costs that arrive at the worst possible moments. Average out-of-pocket medical costs can vary greatly, but putting aside even a little bit every month will help when the unexpected happens.

A couple of things to keep in mind:

These may be created as savings accounts, but they are meant to be spent. Think of them as future spending accounts and use them for exactly what they're earmarked for - that's the whole point.

If you can’t fund the full amount, start small. Even $5–$10 a month per category builds the habit, and that's what matters most. If you have extra money left over after monthly expenses, you can always build up one or more of your savings categories or increase your contributions over time.

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If you want help on structuring or planning for non-monthly expenses like these, schedule a FREE Penny for Your Thoughts Q&A Call​

Remember, small change adds up. Step by step and penny by penny, we’re building a better life. Have a shiny day!

Laura

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