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Money Tip: Christmas and Taxes Don’t Have to Empty the Piggy Bank

My boyfriend Donald and I did our regular balancing of our accounts the other day. We are 30% to our goal of funds we have budgeted for the holidays this year.

What? The Holidays? We just FINISHED the holiday season, why are you talking about it again already??

Well, simple really. By planning now, we’re taking out all the headache and stress out of later. And it’s so simple, ANYONE with determination and a little organization can do it.

Learn how I plan for the holidays each year, a year ahead of time 🙂

Since Donald and I moved in together, I had to adjust my usual Christmas planning budget to account for the additional family, and now the new travel expenses we’ll have to visit his family in Texas every year. But the bonus of this is, he’s also taking on half of the budget from his own salary.  That way we’re both planning ahead and sharing in the expense.

It’s truly a simple concept to save for expected expenses.  People should take more advantage of this method for things they know they’ll have to have money for in the future.  Some immediate examples I can think of include:

  • Car insurance dues
  • Needed automobile maintenance such as new tires
  • Holidays (or birthdays and anniversaries)
  • Fuel oil fill-ups or septic clean-outs
  • New used vehicle (or brand new vehicle, if that’s your thing)

A lot of these you can get a really close estimate to how much you’re going to need to budget for.  For me, I know where I buy my tires from a wholesale tire joint, and I know the type of tires I’m going to need.  I called ahead of time to get a price, and maybe budgeted for $50 more than that, knowing I would want to replace them in 2 years.

So I had my price, my time-frame, and could easily figure out how much per paycheck to put away.  Once the time came for the new tires, I already had the money available, so no debt is accrued.

Easy Steps, because who doesn’t like lists?

  1. Make a list of an item or items you know you’re going to need or want in the future.  You can just use Google Docs or a simple Word file for this.
  2. Figure out or call for estimates for these items, add it to your list
  3. Calculate when you plan to get these items (tires every 2 years?  Holidays once a year?)
  4. Decide how much per paycheck based off of that number that you’ll need to put away to reach your goal.  For example, if I need $500 for new tires, I divide that by 12 months.  If I get paid twice a month, I can divide it by 24 instead to account for the two paychecks each month.
  5. Start auto-saving!  I put all of these in their own separate savings account so I know not to touch that money 🙂  By the time I’m ready for the tires, I can pay for them upfront without the stress or worry.

It really is just that simple, and it’s the same approach I use towards all of my regular bills, from life insurance payments, taxes, holidays, maintenance, etc.

What sort of methods do you have for planning future expenses?  I know my method may not work for everyone, but it’s done wonders for me.

About Crystal Groves, Google+

Crystal Groves is a farmer, web developer, musician, blogger, and personal finance enthusiast from the back hills of Maryland and Pennsylvania. She started Money Drain as a project to encourage people interested in fixing their financial situation to share their stories and learn from the stories of others. We all make mistakes, but in order to change we have to make changes.

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