How to Prepare For Once-in-a-While Expenses

07.29.08 | Money Management | 0 Comments | by junger

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Everyone has those once-in-a-while expenses that require some planning and preparation in order to pay: car insurance (once or twice a year), yearly dues or memberships, and even taxes.

They're a bit odd because they're not recurring monthly bills, so you're not always thinking about them, but when they hit, they can hit pretty hard.

Here's the easiest way to prepare for those once-in-a-while expenses: automatically set aside money to pay those bills once a month.

By setting up a new online savings account or an ING subaccount, you're establishing a fund solely for these once-in-a-while expenses. Rather than having these bills take a big chunk out of your checking account once or twice a year (which itself requires creatively moving money around), the money is coming from a separate location.

But you still need to feed these accounts — and the easiest way to do it is to make your big once-in-a-while expense a bunch of little monthly expenses.

Got a $1200 car insurance bill you know comes every January 1? Set your new account to automatically transfer $100 from your main checking every month. That way, when the bill lands at your door, you've already paid for it.

You may find it works better to have one account for each once-in-a-while bill or to have a once-in-a-while slush fund, where you transfer the total amount of those bills (divided by 12) each month.

Whichever way you choose, the point is the same: by automatically setting aside the money for these bills, it's like you've already paid for them.

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