Budgeting: Don’t Forget Your Annual Expenses

The month to month budget is somewhat of an art in and of itself. You have your rent, utilities, groceries and so on. The majority of Americans struggle paycheck to paycheck making sure ends meet.

One of the ways your budget can get thrown off though is putting off saving your annual expenses. For many people, these may come as a surprise – or if not a surprise, at least at an unexpected (and often inopportune) time. Some will budget their annual expenses and then end up using the money on something else because those funds are not ‘immediately’ needed.

Here’s how to get control of your yearly expenses.

1) List them out. This is as obvious as it is painful. Yearly expenses are easy to forget. I have a folder for “Annual expenses” listed in my budget with each line item. Some common annual expenses:

  • Insurance
  • HOA fees
  • Property taxes
  • Website hosting/domains
  • Software subscriptions (e.g. Dropbox, Evernote)
  • Angie’s List
  • Amazon Prime
  • Costco/Sams
  • Car inspection/registration

2) Keep those costs in a buffer. So let’s say the total cost of your annual expenses (i.e. billed once a year) is $800. That means you need to set aside roughly $70/month to contribute toward your annual expenses. The idea here is to proactively save the money needed before its due versus getting a bill and scrambling to cut something in order to pay it.

3) Diligence and patience. It’s easy to get 8 months into it and have $500 sitting there untouched. Don’t let the money burn a hole in your pocket. Have the discipline to remind yourself that you need to save that because it will become due shortly.

Omar Usman

Omar Usman is a founding member of MuslimMatters, Qalam Institute, Muslim Strategic Initiative, and Debt Free Muslims. He is a regular khateeb and has served in different administrative capacities in various national and local Islamic organizations. You can follow him on Google+ or on Twitter @ibnabeeomar. Check out his latest project at Fiqh of Social Media.

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