The Once-in-a-While Fund: How it Works

by Jason Unger

If you’re like me, you’re always surprised at how expensive that car insurance bill is or how much you really owe in taxes.

The expenses that you don’t pay on a monthly basis can often sneak up on you before you have the money to pay them.

These bills could include:

  • Insurance (auto, homeowner’s, renter’s)
  • Membership fees (yearly dues)
  • Charity donations
  • Taxes

If you aren’t prepared, these expenses can take a bite out of your monthly budget. To fix that, you need a once-in-a-while fund.

How to Handle Your Once-in-a-While Expenses

The once-in-a-while fund transforms your annual/bi-annual expenses into monthly amounts that you put aside in a specific savings account.

So, instead of having to fork out $1000 every January for your homeowner’s insurance, you’d be transferring $83.33 every month into your once-in-a-while fund.

Chances are, you have more than one once-in-a-while expenses. List your once-in-a-while expenses, over a full calendar year. Don’t miss those that you pay more than once a year. For example, if you pay your auto insurance twice a year, make sure to count it twice.

When you’ve totaled up your once-in-a-while expenses, divide it by 12. This is the amount you need to be setting aside each month for your once-in-a-while fund.

Open Your Once-in-a-While Account

When you’re automating your finances, it’s important to have multiple accounts for your many goals.

The easiest way to set aside your once-in-a-while costs is to open a specific account for them. I recommend ING Direct; I use them for my once-in-a-while fund, my emergency fund, my tax fund, and my vacation fund.

After you’ve opened your ING Direct account, set up an automatic savings plan to pull your once-in-a-while costs each month. Now, when the big expense comes due, you’ve already got the money set aside to pay it!

Not sure the easiest way to get set up with multiple ING Direct accounts? Automatic Finances details the process in Day 9, “Open Your Short-Term Savings Accounts.”

{ 2 comments… read them below or add one }

threadbndr April 16, 2009 at 5:59 pm

Also think about putting some back for those expenses that are even more irregular, but inevitable. Things that I have ‘escrow’ accounts for include – vet emergency, new appliances and house repairs (things like paint, roof…), car repairs in excess of regular maint.

All of these are rather inevitable, but may not come around every year. The big problem that I have is trying to decide how much is ‘enough’ for the efund and these ‘occasional’ accounts.

Jason Unger April 17, 2009 at 8:39 am

I think that’s a great point, threadbndr. Every month, you likely have “unexpected” expenses — stuff that you aren’t planning for, but doesn’t really count as an emergency or one of these once-in-a-while expenses.

Putting aside money for that could certainly help relieve those inevitable expenses.

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