photo courtesy TimmyGUNZ
How’s your Christmas fund coming? “What!?!?!”, you say. “It’s only St. Patrick’s Day!” I’m serious. Christmas is coming in just 9 more months. You probably spend quite a bit of money during that time with all the gift giving and special meals. The money has to come from somewhere. Why not make a plan for it?
It’s important to plan ahead for expenses. A little saved from each paycheck is much easier to manage than trying to eek it out of a couple of paychecks leading up to Christmas. And I know you wouldn’t use a credit card to cover Christmas, right?
The same thing applies to other large, non-monthly expenses. Things like property taxes, birthday (gift) funds, insurance premiums, and annual memberships are great candidates for “sinking funds”. That’s “geek speak” for a fund you build slowly over time. Kind of the reverse of a loan.
Often you save money by doing this as well. I’ll bet your auto insurance carrier charges a fee for a monthly payment plan versus paying once every 6 months.
When you’re creating a budget, make sure you think about all the potential expenses you have coming up in the future. Divide that expense by the number of months until it occurs, and add that number to your monthly budget. Set that money aside in a savings account and keep track of it as it builds. When Christmas comes, you’ll have the money on hand just waiting to buy those gifts. Won’t the smiles on the kids’ faces be much more precious to you if you haven’t financed your future to buy them?