Life happens, and preparing for unexpected expenses helps us be prepared for when it does.
Here are 8 steps you can take:
1. Get organized
Look at the last 12 months of bank statements and credit card statements.
2. Identify annual irregular expenses
These expenses are items that are typically paid annually.
There are 6 different categories: Home, Auto, Pets, Health, Kids, and Misc.
- Property Taxes
- Vehicle registration renewal
- Maintenance (oil changes/tires etc)
- Vet Visits
- OTC medication
- Field trips
- Birthday Parties
3. Calculate what you need to save
1. Add up the total amount of annual expenses
2. Divide by number of paychecks a year
3. Set that amount aside every paycheck
Example: ($3000 year/26) = $115 per paycheck
Part 2: Coming in February 2018