There are certain recurring expenses that I keep track of and fund out of a ‘virtual’ sub-account in our checking account. The way that this happened is that these are the types of expenses that I used to pay from my checking account, where most of the other expenses would be drawn from my savings account. Now, we only use a checking account and then a long term savings. So it’s sort of a checking and ‘virtual’ checking account if you will.
But, the type of expenses I track with this are, for example:
- Netflix Subscription
- Utility Bills
- Car Insurance Premiums
- License Tab Renewals
- Auto Club Membership Fees
- Charitable Donations
I am usually pretty on the mark when it comes to projecting the expenses that fall into this category, but what I’m trying to do now is to level out the expenses each month. See, many of the expenses above are monthly and around the same cost, but some are not. This is because of seasonal changes (higher electric bills in the summer, higher gas bills in the winter) or billing cycles for bills that aren’t monthly (the water bill every two months, the garbage bill every three).
So, what would happen is that some months I would set aside $800 where other months it might be higher. What I’m trying to do is estimate the costs over the course of a year, and even them out, so that I’m setting aside a consistent amount of money every month. Many times the electric company or gas company will do this for you, so in a sense, this isn’t a new concept.
I’m just starting to get into leveling the expenses out. I figure it will take a few months to adjust to where they’re smoothed out, and I won’t really be able to judge myself until the first year is done, but I’m confident that I will estimate correctly. Why? Because I’ve been tracking all of the actual costs of these categories for about 18 months, and I’ve added a cushion to where I should definitely not come up short.
Wish me luck!
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