There is a difference between bills and expenses.
A lot of people who talk about personal finance don’t distinguish between them. They say it’s all your “outgo” or just “what you spend money on”.
But a car insurance payment is very different from the sandwich you bought.
Unless you subscribe to the Sandwich of the Month Club, or are just particularly habitual, your sandwich purchases are going to vary by day, by week, by any measure of time.
On the other hand, a car insurance payment is a regular and predictable expense. If it changes amount, it’s usually once a year or so. They aren’t “lumpy”.
Why would you treat these two different cases as the same?
Bills are the regular predictable expenses. When you’re determining how much money you have to spend in a given month, you take your income, subtract your bills, and whatever is left is your expenses. Which can be as irregular as you want.
But what if your bills are irregular? Do you treat them as an expense? Or do you just deal with your bills being lumpy?
Well, you can do it however you please, but I think that the best way to do this is to work to minimize the lumpiness.
I encountered this recently in a few different areas. Here’s how I made my bills less lumpy.[Read more…] about Make your bills less lumpy