The $7 Million 7 Years Wealth System

CS11 – Calculating Your One Time Expenses

Posted by AJC
July 11, 2010

Over the past month Dan (United Kingdom) recorded expenses in the following categories for his One Time Budget (KLE25):

Food and Drink
Meals out
Restaurant tips
Garden plants/accessories
Printer ink cartridge
DVDs
Hair cut
Lottery
Car fuel
Car maintenance

Dan is pretty sure “that most of the above expenses are not ‘one time’ expenses since I’m paying these out every month”.

But, he correctly classes the following categories as ‘one off’ expenses (in his case):

Garden plants/accessories (“I only buy this stuff in the spring and summer months”)
Printer ink cartridge (“I buy these every 7 weeks”)
Hair cut (“I have one every 6 weeks”)

I’m reasonably sure that car maintenance would also be a one-time expense, and don’t see any one-time expenses listed for things like insurance, and so on … however, for this exercise, we’ll simply assume that Dan has listed his one-time expenses as those three above:

In order to add these Garden plants/accessories; Printer ink cartridges; and, Haircuts to his One Time Budget correctly, Dan would simply need to work out how much he would expect to spend on each of these over the next 12 months, then add one-twelfth of that amount as just another monthly cost.

Because Dan is from the UK, we will work in British Pounds, but the currency symbol is irrelevant; if you work in US dollars, Australian dollars, Euros, or Yen simply substitute your own currency symbol, if that would make this example easier to follow for you.

For example, let’s say that Dan spends £28 on a printer cartridges every 7 weeks (roughly 7 times a year), then that would be 52 / 7 x £28 = £208 a year.

Or, £17.33 a month (£208 / 12).

So, Dan would just ‘pretend’ that he spent £17.33 on printer cartridges during the month, and use that as his one-time budget amount for that category.

Similarly with Garden plants/accessories: let’s say that Dan spent £100 last summer and another £80 last winter and he thinks those are reasonable amounts to spend this year as well.

Then Dan would simply add ( £100 + £80) / 12 = £15 to his one-time budget.

This is how Dan will save up enough to pay £100 when next summer rolls around (his One Time Budget now tells him to put aside £15 per month so that when summer or winter next rolls around, Dan will be able to afford to buy those needed Garden plants/accessories.

Finally, if the month Dan chose to do his one-time budget happened to be the month that he spent his summer £100 on Garden plants/accessories, then he would REPLACE that £100 in his One Time Budget with £15.

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