Save for the Unexpected

Many people have certain periodic expenses throughout the year as well as regular monthly expenses. Periodic expenses may include insurance, property taxes, automobile and home maintenance, and replacement of major appliances. In addition are the unexpected expenses, including medical bills and car and home repairs. To meet these occasional expenses, most people either withdraw funds from their permanent savings or, in times of urgent need, incur high interest debt from loans. If you are caught in the cycle of paying for periodic and unexpected expenses and then trying to catch up with the monthly bills, an occasional-expense account could work for you.

Begin by making a list of your occasional expenses. Then project the amount of these bills for the next year. You can estimate this amount by using canceled checks and credit card statements from the previous year and adjusting as necessary. Deposit one-twelfth of the yearly total into a separate account each month. Perhaps you can make a large initial deposit from a tax refund or a salary bonus so you will have a nest egg at the beginning.

By allocating for occasional expenses on a monthly basis, you will have adequate funds set aside to pay for these expenses without disrupting your regular savings program or having to withdraw from your permanent savings.

Having the discipline to use this account to pay for only irregular expenses is the key to the account’s success. Although this account will never make much in the way of interest, over time it can save substantial amounts of money that could otherwise be lost to unnecessary spending or to interest charges for a loan.

As we free ourselves from financial worry and debt, we will have greater peace of mind and security. This, in turn, will allow us to focus on strengthening our families and building up the kingdom of God.—E. LaMar Johnson, Topeka, Kansas