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Don't let periodic expenses sneak up on you


You may have a good idea of where the money is going on a day-to-day basis, but before you start working on a spending plan or budget, it is important to call attention to the top budget breaker: periodic expenses.

Periodic expenses are those that are not paid on a regular monthly basis. For example, both holiday and tax debts are periodic, meaning they are not part of regular monthly expenditures. In that regard, they join the ranks of other expenses such as auto registrations and vacations.

Often, we know when these events will occur, but still fail to plan for them. Unfortunately, when these expenses arise, many people rely upon credit to extend their monthly incomes; using credit this way is one sign of pending financial trouble.

To avoid this scenario, follow these tips when planning for periodics:

  • Determine what you spent last year for periodic expenses. Assume that you will spend at least this amount again this year.

  • Don’t hide expenses. Just because you don’t list an expense doesn’t mean you won’t have to spend money on it. Don’t forget things like back-to-school expenses, auto repairs, and birthday gifts.

  • Plan for premiums. Remember that some items, such as auto insurance premiums, may occur more than once a year.

  • Open a savings account. When you have a realistic idea of what you will need to spend on periodic expenses during the year, divide the total amount by 12 and save that amount each month. Designating a savings account for this purpose may help to organize this process. Check with your financial institution, you may even be able to have the amount automatically transferred.

Here is an example of a periodic expense can impact your monthly budget:

Example: Annual auto registrations

Assume your annual auto registrations cost $800/year. How much should you budget each month to cover this expense (even if you don’t have to pay it monthly)?

$800 / 12=$67/month

So, to be prepared for the annual $800 expense, you must put $67 each month into a savings account or into an “auto registration” envelope. That way, you will not have to rely on credit when the bill is due.

Use this simple calculator to determine how much money you need to save per month to cover periodic expenses.


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Financial lessons for
college-bound students

With the cost of college tuition skyrocketing and the average college graduate’s student loan debt topping $25,000, there are some crucial financial lessons students should learn before they step foot on campus.

As an increasing number of college-bound students are expected to foot the bill for the cost of obtaining a higher education, it is more important than ever for students to learn proper money management skills in order to build a solid financial future.

Lesson No. 1: Keep lines of communication open. Will you be expected to get a job while you are in school? Will mom and dad be pitching in to cover the cost of your books? These are all questions that need to be addressed. The financial expectations of both the student and the parents need to align in order to develop a solid plan.

Lesson No. 2: Be realistic. The best way to prepare your finances for life away at school is to first school yourself on the basics of budgeting. Simple expenses such as doing laundry and going out to eat can add up quickly, so don’t forget to factor those costs into your budget. Your budget should also contain some personal savings for emergencies, unplanned expenses, and any other savings goals you may have.

Lesson No. 3: Track spending for the first semester. You may be surprised how quickly small expenses can add up. For example, grabbing a cup of coffee and a bagel each morning before class can end up setting you back more than $100 a month. Tracking your spending will help you refine your budget once you can clearly see where your money is actually going.

Lesson No. 4: Set goals. Whether you’re saving for a Spring Break trip or a new pair of jeans, setting goals will help you stay within your budget and keep you motivated. Make a list of short-term, mid-term and long-term personal financial goals, and then prioritize your list based on importance.

Lesson No. 5: Consider consequences. Although this applies to all aspects of student life, it’s especially important when you’re making big financial decisions. Opening up a credit card when you’re young may seem harmless, but if you’re irresponsible with your spending, you could end up with a low credit score and high debt, which could affect your ability to rent an apartment, buy a car, or even get a job.

If you need help creating a budget, the counselors at Money Management International (MMI) can help. MMI offers free budget and debt counseling to those who need help with budgeting, money-management skills and credit issues.

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Tips for Success

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Update your account balances online. When you receive your monthly statement from your creditors, login to your MMI account and update your balances. It is important that we have the most accurate balance information possible on file. 

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About Money Management International

Money Management International (MMI) is a nonprofit, full-service credit counseling agency, providing confidential financial guidance, financial education, counseling, and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan, and repay debts. Counseling is available by appointment in branch offices and 24 hours a day, 7 days a week by telephone and Internet. Services are available in English or Spanish. To learn more, call
866.530.9869 or visit

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