When you’re trying to prepare a budget to protect your family’s financial security, it can be a difficult task in and of itself, but when you try to plan for unexpected expenses, the task can get even trickier. It’s hard to put a number on the unknowable.

While there’s a virtual ocean of information online about creating a budget, there seems to be no clear consensus of what constitutes an “unexpected” expense. Some articles will equate unexpected with emergency expenses, but for the purposes of this article, we’ll distinguish the differences between the two and separate a budget into it’s three component parts: regular monthly expenses, irregular annual expenses, and emergency expenses.

Regular, Irregular and Emergency Expenses

Regular monthly expenses are the easiest to both understand and track. These expenses include bills you pay each month, like your rent or mortgage, utilities, insurance, day care, and car payments. These expenses also include categories that might be a bit more difficult to track but will still account for a significant portion of your monthly expenditures, like groceries, eating out, entertainment and clothing.

Expenses that occur every few months, a few times a year, or just once a year are irregular annual expenses. These are sometimes referred to as “unexpected” expenses, which can be confusing, because they’re expenditures that reoccur like clockwork. Holidays and birthdays, and the expenses that accompany them, occur at the same time every year, so they aren’t actually unexpected. Back-to-school shopping and vehicle registrations are also examples of irregular expenses that when recognized and planned for can be part of creating a successful budget that doesn’t leave you short.

The expenses that catch you off guard, are unforeseen, unavoidable and unknowable, are emergency expenses. Losing your job, getting injured, becoming seriously ill, or having to make a major home repair are involve emergency expenses. The general rule of thumb is that your emergency expense fund should have enough to cover your living expenses for three to six months.

Research Your Expenses

To start creating your budget, you’ll need to start researching your expenses. To do this you’ll need:

  1. Bank and/or credit card statements, check book registers, monthly bills, calendars, etc.
  2. Computer spreadsheet or grid paper and a calculator
  3. Time
  4. Patience and perseverance

Create Your Expense Grid

Starting with the second column, enter each month at the top of a column. Label the last column “Total.” See the example below.

In the first column, down the left side, enter a category for each of your regular monthly expenses. In the example below, Row 2 is labeled “Rent”; Row 3 is “Electricity.” Be sure to leave rows open for items you might have to add later.

Once you’ve completed your regular monthly expenses, add categories for irregular annual expenses like holidays, birthdays, school supplies, uniforms, and vehicle registration.

Enter Your Expenses

Once your grid is complete, it’s time for the hard part – entering your expenses. The more time and effort you spend in researching your expenses, the more accurate and successful your budget will be. Have all your resources close by, including your bank statements, credit card statements, and calendars. You may want to start with your regular monthly expenses because they’re the easiest to track.

When you move on to your irregular expenses, your calendar is going to come in very handy. Use it to review your year’s events and see which ones were associated with expenses that will reoccur next year.

TIP: Your task will go much faster if you can export your online bank and credit card statements into spreadsheets. Sort and filter them to suit your needs.

Determine Your Monthly Budgets

Add up all your regular expenses for the year and divide that number by 12 to determine your monthly budget for regular expenses. For instance, if your regular expenses totaled $42,000 for the year, your monthly budget for those expenses would be $3,500 ($42,000/12=$3,500). Follow the same steps to determine your monthly budget for irregular expenses.

In the best-case scenario, you’d have a separate bank account for your irregular expenses, with automatic deposits being transferred into this account from each paycheck. Any leftover funds in your irregular expense account could either be left alone to roll over to the next month or be transferred to a separate emergency expense account.

Emergency Expense Fund

Ideally, your emergency expense fund should also be kept in a separate bank account. This will help you keep those funds safe from non-emergency temptations. After you pay your regular and irregular expenses each month, transfer remaining funds to your emergency account. If your finances allow, set up automatic deposits into this account. Reassess your budget regularly to see if you can handle larger contributions until you’ve reached a goal of three to six months’ worth of living expenses.

What if There’s Not Enough Money in My Emergency Fund?

If your irregular and emergency accounts aren’t quite ready to handle an incoming expense, there are a few options you can investigate before doing something more drastic, like raiding your retirement or life insurance account. These ideas will also work if you want to hit your emergency fund goal as quickly as possible.

  1. Reassess your budget: Review your budget to see if there are any categories you could pare down in the short term. Irregular expenses like entertainment, restaurants and clothing are usually the first categories to feel the squeeze when a budget needs to be tightened. You can save on your regular expenses by researching your providers’ competitors. You may be able to find better offers on auto insurance, cable and cell phone plans.
  2. Supplemental income: Supplemental income can come from additional employment, like seasonal, part-time and freelance work, and selling unused items. If you’re already working a full-time job, you may be able find weekend shifts, especially in the hospitality and retail industries. Depending on the skills you have to offer, freelance work can be found on sites like, and Uber and Lyft are options for those with reliable transportation and a clean driving record.

    If you have unused electronics, clothing, furniture, or any other unwanted items taking up space in your home, list them on sites like Craigslist, eBay and OfferUp. You’ll be doing the environment a favor, getting extra cash, and decluttering your life.

Creating a budget for yourself and your family is a time-consuming task that takes patience and hard work. Reviewing it, adjusting it, and sticking to it are even harder, but your financial security is well worth the effort.