Make a More Realistic Budget with These Rules of Thumb for Irregular Expenses

Budgeting is pretty easy when you have regular income and regular monthly bills, but don’t forget to plan for non-monthly expenses. NerdWallet tells us how much we should set aside for things like car maintenance and other necessary expenses.

If your car insurance is due every six months, set aside one-sixth of the total every month in your savings reserve, the site advises, and also keep in mind seasonal expenses like vacations and gifts.

When it comes to maintenance and replacement items (your laptop won’t last forever and your car tires will eventually need to be replaced), consider these guidelines:

• Personal property — 2% to 4% of your net annual pay to replace and maintain items
• Car maintenance and tires — 5 to 10 cents per mile. For example, if you drive 10,000 miles annually, you should plan on $500 to $1,000 per year for car maintenance. Most of this would be set aside into short-term savings that you could draw on as expenses arise. But 20% should be set aside in a longer-term savings account to replace tires when needed.
• Home maintenance and replacement — 2% to 3% of your home’s value. Roughly one-third of this amount should be in a longer-term savings account to cover replacement of higher-ticket items like furnaces, driveways and roofs.
• Contingency fund — 2% of net annual pay to cover stuff that you just didn’t think of.

Also, if you have a car payment, once you are done with it, start putting some or all of the amount you were spending each month into a car replacement fund.

These will help you set up a more realistic budget and avoid surprise bills or financial pitfalls that can keep you from meeting your financial goals.

Try This Budget Plan to Regain Control of Your Money | NerdWallet

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