Dodging the big wallops
BEING hit with whopping once-a-year expenses can leave a big hole in your hip pocket.
Car registration, annual insurance policy costs, school fees and body corporate costs are just a few of those hefty bills that often roll around once a year – and they hurt.
Here are four ways to prepare for these types of expenses.
1. GET OUT YOUR CALENDAR
Being caught short financially by hefty bills can leave you in shock when they arrive in the mail or pop up in your inbox.
Mark on your calendar when your next big bill is due – that way you will be prepared for it.
2. START A PLAN
Once-a-year bills sometimes cannot be paid in smaller increments, so you need to have the cash there by the due date.
If the bill hasn’t yet arrived, work out roughly what you think the cost will be – based on last year’s bill – then work out how much money to set aside each payday so you can afford it.
For an $800 car registration bill, that’s $15.40 a week, $30.70 a fortnight or $61.50 a month.
3. STASH THE CASH
One of the easiest ways to afford these costly expenses is by setting up a separate bank account with automatic direct debits set to leave every time you get paid.
High-interest savings accounts deliver low returns, often around 2 per cent, but they can still be a good place to tuck away your money.
Another simple trick is to put in an envelope any spare notes or coins you accumulate through the week. This will quickly add up and, come bill time, hopefully you will have a nice little stash to pay it.
4. PAY THE BILL
Make sure you pay the bill by the due date. Often companies will slug you with interest charges if you don’t pay on time, and that can hurt.
Then once you can tick it off, as done and dusted for 12 months, write down in your diary when next year’s bill is likely to be due and start your preparation all over again.
Of course, if you are still struggling, make sure you talk to the provider and see if you can set up a payment plan.