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How to Budget For Non Recurring Expenses

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One of the most frustrating parts of managing your finances is planning for unexpected expenses. These non recurring expenses happen just one time, but they can seriously disrupt your finances if you aren’t prepared for them. Unfortunately, 72% of Americans live paycheck to paycheck, which makes it difficult to save money for non recurring expenses. 

Including non recurring expenses in your monthly financial plan will help make them less intimidating when they do happen. Here’s how to budget for non recurring expenses so that you’ll always be ready for what life throws your way. 

What Are Non Recurring Expenses?

Non recurring expenses are costs that happen either one time or very rarely. They are expenses that aren’t expected to come up again in the future. This is in contrast to recurring expenses, which are due at specific intervals and should be part of your monthly budget. 

Because non recurring expenses often come up with no warning, they can be difficult to plan for. Learning how to budget for non recurring expenses will make them less stressful when they arise. 

Medical bills, car repairs, and home repairs are some of the most common non recurring expenses that consumers face. Replacement items are also a very common non recurring expense. For example, you’ll likely need to replace your electronics, clothes, furniture, and other items when they break or wear out. 

Many non recurring expenses happen as a result of emergencies. However, these expenses can also be part of your discretionary spending. For example, vacations and birthday, wedding, and graduation gifts are popular discretionary non recurring expenses. 

How to Budget For Non Recurring Expenses

To avoid unpleasant financial surprises, it’s important to budget ahead of time for these one-time expenses. Here’s how to budget for non-recurring expenses and keep your finances in check. 

1. Make a List of All Your Expenses

When learning how to budget for non recurring expenses, start by getting all your expenses in writing. Seeing the expenses on paper can help them feel less overwhelming and makes them easier to organize. 

Start by making a list of your recurring expenses. These are expenses that need to be paid every week, month, or year. These include your rent or mortgage, car payment, health insurance payments, credit card payments, and utility bills, for example. 

You should also factor groceries and household essentials into your list. Since the prices of these items can fluctuate, calculate an average spending amount based on recent shopping trips. On top of that, add recurring discretionary expenses to your list. For example, if you frequently eat out or go to the movies, you should add an estimate of these expenses to your list as well. 

Then, add potential non recurring expenses to the list that could possibly come up in the next few years, even if they haven’t happened yet. For example, if you anticipate replacing your smartphone in the next year, add that to the list. Other non recurring expenses everyone should consider include surprise medical bills and home and car repairs. It’s hard to budget a specific amount for these, but it’s important to keep in mind the possibility that they could come up so you won’t be tempted to limit your emergency fund to the bare minimum.  

2. Estimate How Much Each Expense Costs Annually

Once you’ve compiled your list of expenses, add them up to determine your total annual expenses. Then, compare this amount to your current income. If your total possible expenses exceed your annual income, you will likely need to cut back on your spending or find additional forms of income. 

Even though your non recurring expenses might not happen, it’s still very important to plan for them. Most non recurring expenses come up unexpectedly, which can be very stressful. Planning ahead for these surprise costs helps to reduce financial stress. 

Building an emergency fund can also help you prepare for unexpected costs and changes in your financial situation. For example, an emergency fund can help support you if you lose your job and no longer have enough income to cover essential expenses. 

Ideally, your emergency fund should cover at least six months of basic expenses. This money should be kept in a separate high-yield savings account, which will reduce the temptation to use it for non-emergencies while your balance grows over time. 

3. Divide Your Annual Costs Into a Monthly Budget

The next step is to take your annual expenses and divide them into a monthly budget. Your budget is a financial plan that you can reference each month when making spending decisions. It will also help you avoid accidentally overspending. 

Your budget should plan for both fixed and non-fixed costs. For example, you might plan to spend $400 on groceries each month. Although the exact cost of groceries can vary from week to week, budgeting a specific amount can help you make smarter spending choices. 

You should also incorporate savings as part of your monthly budget to prepare for non recurring expenses. For example, you might opt to put $200 per month into your emergency fund. This way, you’ll quickly build up a cushion that you can use for things like unexpected medical bills or maintenance. 

Keep in mind that your budget will need to be adjusted over time as your life changes. For example, if your income increases, you may opt to save more, but if it decreases, you’ll need to cut back on discretionary spending. 

You should also change your budget as you reach key life milestones. For example, buying a new home, having a child, or retiring will inevitably change your budget. 

4. Build Your Budget System

Once you’ve finalized how much you can spend each month, you’ll need to come up with a budgeting system to keep track of it all. Learning how to budget for non recurring expenses involves breaking your spending down into categories and tracking your expenses. 

You can create a budget manually with a pen and paper or a digital spreadsheet. Many people enjoy the simplicity of this approach. However, it does require you to be very precise and diligent when tracking your budget. 

Technology makes it easier to manage your budget automatically. There are many apps available that you can link to your bank account to track your spending more easily. Two popular examples of this are Rocket Money and YNAB

Try Rocket Money Now

The Rocket Money home page with signup button and a cell phone displaying the app in action.
The Rocket Money homepage where you can sign up
Source: Rocket Money

Both apps help you monitor your spending throughout the month and break it into categories. They’ll also help you set long-term savings goals to stay motivated and learn how to budget for non recurring expenses. Within the app, you can set a savings goal specifically for emergencies. This will help you learn how to budget for non-recurring expenses so you’ll never feel unprepared. Check out our Rocket Money review to learn more. 

To learn which budgeting app could best help you manage your finances and boost your savings, check out these comparisons of Rocket Money vs YNAB, Simplifi, and Copilot:

These tools can also help you identify unnecessary expenses, such as subscriptions you’re not using. They’ll also give you tips to help you save money without feeling stressed. The more visibility you have into your budget, the easier it will be to prepare and make informed financial decisions. 

If you’re looking for a low-tech, hands-on budgeting method, learn about cash envelope categories. And if you need to boost your savings fast, the 60/30/10 rule budget can help.

Try Rocket Money Now

The YNAB home page featuring their "Change your relationship with money" slogan and a cell phone displaying the app.
The YNAB homepage offering to “Change your relationship with money”
Source: YNAB

Another important component of any budget system is your bank accounts. Instead of having one bank account for everything, try using at least two bank accounts to encourage saving. For example, you can use your checking account for recurring expenses and a high-yield savings account to prepare for non-recurring expenses. If possible, have a certain percentage of your paycheck automatically deposited in your savings account based on your budget. 

If you’re feeling like “I need money desperately,” don’t worry — there are things you can do to boost your income and build a slightly more flexible budget. For example, you can look for banks with immediate sign-up bonus and learn how to get the Chime referral bonus to give you a financial cushion. 

Commonly Asked Questions About How to Budget For Non Recurring Expenses

How Do You Budget Inconsistent Expenses?

The easiest way to budget for inconsistent expenses is to plan conservatively. Put aside slightly more money than you think you will need for any given expense. 

Groceries are one of the most inconsistent expenses for most people. To budget for this, look at your grocery bills from the last several weeks and average them. Then, budget slightly more than the average for each week. On weeks that you spend less than the allotted amount, save the extra money for the future. 

Do you get paid twice a month and find yourself struggling to account for that in your budgeting? Learn how to budget biweekly paycheck. And if you need to ramp up your savings fast, learn how to save $3000 in 3 months.

How Do You Budget For Occasional Expenses?

Occasional expenses like medical bills, car repairs, taxes, and travel are tricky to budget for. Since you can’t always anticipate these expenses, the best way to budget for them is by creating an emergency fund. 

To do this, put a small percentage of each paycheck in a separate high-yield savings account for emergencies. This way, when these occasional expenses arise, you’ll have extra money ready to use. You also won’t have to worry about cutting back on other expenses to meet your needs. 

How Do You Budget Random Expenses? 

Random expenses are particularly difficult to plan for. Unfortunately, most people experience random expenses at some point in their lives. Here’s how to budget for non recurring expenses: Save a small amount of money each month and put it in an emergency fund in a high-yield savings account like CIT Bank. This way, you’ll have a little bit of extra cash on hand when random expenses pop up. You can also use the 52 week money challenge to build your savings and stay focused on your financial goals. 

Non Monthly Expenses Examples / Irregular Expenses Examples

Here are some of the most common examples of non-monthly or irregular expenses:

  • Medical, dental, and veterinary bills
  • Car maintenance and repairs
  • Home maintenance and repairs
  • Travel/vacations
  • Gifts
  • Unplanned tax bills
  • Replacing personal items when they break or wear out