Budget Boot Camp: Hate Scrabbling to Pay for Big Expenses?

Irregular expenses are a big topic in budgeting, so to ensure it was explained clearly, I turned to my husband Bryan (a non-accountant) to explain how we budget for our non-monthly expenses (e.g. car repairs, insurance, property tax, etc.). Bryan's just a regular guy who been sucked into my budgeting madness. Here he is holding our two boys (I know--they're all pretty cute).

Note that the example below is for known expenses, but we also use it for some of our "unknown" expenses (e.g. car repairs and general savings) using estimated amounts. So when we have big car repairs, they're already saved for. We simply pull the money out of this account that has been accruing savings for months and months. It'd worked like a charm so far. So without further ado, here he is:

We have all been there, you are going along, life is good, the checking account is growing and then all of a sudden, those big expenses hit and you are scrambling to pay for everything.  Budgeting to the rescue!  A few weeks ago Lisa asked me to write about how we set our budget to accrue monthly for expenses that occur once or twice a year.  This system helps to level out the known planned expenses by saving for them every month.  

To start off, I am sure there is some accounting principle that Lisa could explain around this, but the easiest way for me to explain it is that we know some expenses happen a few times through the year (life insurance, property tax, car insurance, etc.) and we take the annual amount (say $1200 for car insurance) and then divide by 12 to get our monthly amount of $100.  At the beginning of each month, I transfer the sum of all those monthly amounts into our savings account (a separate checking account at an online bank).  See the example table below.

Expense	Annual amount	Monthly Amount
Car Insurance	$1200	$100
Homeowners Insurance	$600	$50
Life Insurance	$500	$42
Property Tax	$4000	$334

In the example above, the monthly transfer is $526.

When the bill comes to pay those expenses, we pay them out of our savings account (where the money have been accruing and collecting interest).  The true beauty of this system is that there is no worrying about how we are going to pay the property tax bill, or the car insurance bill, because we have already paid it.  The table below outlines an example of how the system would work

	Jan	Feb	Mar	Apr	May	June	July	Aug	Sept	Oct	Nov	Dec
Start	2000	2526	1052	1078	1604	1830	1756	2282	808	1334	1860	2086
Additions	526	526	526	526	526	526	526	526	526	526	526	526
Expenses	0	2000	500	0	300	600	0	2000	0	0	300	600
Ending	2526	1052	1078	1604	1830	1756	2282	808	1334	1860	2086	2012

Our budget is happy because we avoid the stress of seeing the monthly budget in the red. And we are happy because all the stress associated with trying to pay the big expenses disappears as we have already paid for them.  The key to making this system work is to move the money into a separate account.  The reason why this is important is so that you are not tempted to spend it, or think you have enough savings.

This system takes some discipline and I would strongly encourage you to set auto transfers to make it easier.  But the pay off when the expenses hit is completely worth it.

Any questions?

Kids Doing Their Own Laundry by Age 8--Here's How!

PIN THIS FOR LATER--> http://www.pinterest.com/pin/195765915026639789/

About me: Hey there! My name is Shauna Klippel. I have a wonderful husband and together we have seven children. While I love things like, vintage fashion, keeping organized and exercising, what I love even more is dedicating myself to this family we have created. Helping my children to be happy and successful in their lives is number one on the list for me right now. Together, my husband and I work hard to instill a good work ethic, love and spirituality in our children's lives and in our own lives as well. Part of what makes life busy is homeschool, frequent travels to San Francisco, and regular old household work that has to be done in order for our home to run happily and efficiently. And this is the life that I love the most! Check out my blog at klippel.blogspot.com.

Here I will share with you, tried and true tips and the belief I have behind having children do consistent "work" in their homes. 

Like most of us, as parents we are always looking for opportunities for our children to work. We want our children to be productive people. Gone are the days where we work from sun up to sun down, performing hard tasks that could actually be described as labor. Except for some, this just isn't our reality anymore. So, while manual labor may not be on the back porch, we can expect our children to do major household tasks such as laundry. And this is just what we've done. We've taught our children to do their own laundry from a young age and they are expected to do it weekly. Keep in mind that these tips are tried and true. And, I'm not going to share anything that's rocket science, really. Read on to find out how I get my kids to do their own laundry...it's really quite simple. 

Shauna's Four Oldest Kids

AGE 5:  

First off,

10 Money-Making Jobs for the Stay-At-Home Mom

I'm adding 2 more GREAT Money-Making Jobs for the Stay-at-Home Moms that I have personally had success with. (Edited by Lisa - Creator of MoneyHipMamas.com.)

#1: Bookkeeper - Own a 100% Virtual Bookkeeping business.

Not sure you have what it takes? Take this free introduction to bookkeeping class to find out!

#2: Blogger - Start your own blog!

Make money as a blogger through page views, ad revenue, affiliates, and paid content.

This is the blogging course I took - I highly recommend it!

#3: Start your own business

If you're thinking of starting your own business, I highly recommend this book: Will It Fly by Pat Flynn. It personally helped me design and build my successful businesses. It has over a thousand 5-star reviews for a reason. Pat Flynn walks you through the step-by-step process of creating a meaningful and successful business, starting with your "WHY" and your values for your business.

About me: I met Lisa and Lauren in the Accounting program at BYU. After graduation I moved to Houston to work in audit for a large public accounting firm. I left my (good-paying,

Money Hip Friends: Budgeting with a Plan

Remember this post where I said we were trying to get our smart friend to write a guest post for us? Here it is. (And for those of you who don't know her, Paige is one of those people that is always #1 (usually literally) at whatever she does, so she's a good one to listen to.)

Paige, Lisa, and I are good friends from the BYU accounting program. She's a young mom of two little girls (2 ½ and 7 months), so life is busy, but having a budget and financial plan in place really helps her to simplify. She also loves to help others with their budgets and help them gain the peace of mind that comes from being in control of your finances.

I think I’ve made a budget, now what? Budgeting with a plan

From my experience, one of the main reasons that people fail at budgeting is because real life doesn’t always fit into an identical monthly mold. After you have worked and drawn up your first budget draft, there are three things to consider to make sure that you have a real, complete budget and sound financial plan: