Just as you need to set aside money for unexpected expenses, you also need to allow for expected expenses that are not part of your monthly budget. These might include insurance premiums, quarterly or year-end taxes, planned travel, or scheduled maintenance on your car. How much you’ll need to save each month can be determined by dividing the cost of the item by the number of months you have to save for it. For instance, if you know you’ll have to pay an insurance premium of $180 in six months, divide $180 by 6 to get $30, which would be the additional amount you’ll need to put aside for each of the next six months.
As you can see, there is no one approach to personal finances that will work for everyone. Making the right plan depends on your goals, how far into the future they are, and the resources you are able to contribute toward achieving them. Even once you’ve made a savings plan, you should revisit your choices often and make sure they are still appropriate as your circumstances change. Even though the specifics of your plan may change, you can continue to apply the principles we have discussed.
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