You will be able to find irregular costs you have forgotten by searching a year of statements and your calendar.
After lesson 3.1, Wei Ling listed her irregular costs from memory: Lunar New Year, the Penang trip and December's presents. When she went through a full year of statements properly, she found four more. She had been paying one of them every March for three years and had never counted it.
Your memory is good at festivals and holidays. It misses three kinds of cost: things that renew quietly, things that follow someone else's calendar, and things that only come every few years. You find each kind in a different place. Renewals show up in your statements, other people's events are in your calendar, and the costs that come every few years go on a list of things that wear out.
In lesson 1.2 you downloaded three months of statements. For this search you need more. Download twelve months of bank and card statements, going back a full year if your bank allows it. A yearly charge only shows up if the statements cover the month it was paid.
You don't need to tag every line this time. You are only looking for items that appear once or twice a year rather than every month. A spreadsheet makes the scan faster: sort by description, and the monthly items group together while the yearly ones stand alone. You can also search for words that often mark annual payments: "annual", "renewal", "membership", "premium" and "yearly". Check specifically for these:
insurance premiums paid yearly rather than monthly the credit card annual fee, which some banks charge unless you ask them to waive it memberships, such as a gym, a club or a professional body software or cloud storage that renews yearly if you own a car: road tax, car insurance and servicing if you have a pet: vaccinations and licence renewals
Wei Ling's scan turned up a S$48 cloud storage plan that renews each March (an example figure, like the other amounts in her story). She had lumped it in with her monthly subscriptions. The scan also found a S$160 dental check-up and cleaning every July.
Statements show what you paid for. Your calendar shows why. Go back through last year's calendar and messages and note every event that cost money: weddings, birthdays, baby showers, farewells, reunions, trips and family occasions. Most people in their late twenties and thirties go to several weddings a year, and each one can mean a gift, an outfit and sometimes travel.
Wei Ling's calendar showed two weddings last year. She only remembered the December one. She had paid for the September one by PayNow, and in her statements it looked like an ordinary transfer. PayNow payments are easy to miss for this reason, so the calendar is where you catch them.
Look ahead as well as back. Invitations you've accepted, a sibling's wedding next year and a family trip that's already being discussed all go on the list. Wei Ling already has an invitation to a September wedding this year and expects to spend about S$300 on gifts and clothes.
Some costs aren't in last year's records at all because they didn't happen last year, but they will happen eventually. These are replacement costs: the cost of replacing things that wear out, such as phones, laptops, home appliances, glasses, a mattress, a bicycle or furniture. They tend to come at bad times, usually the week after the festive season.
You don't need to plan for every object you own. Only include items that would cost a few hundred dollars or more to replace and that you would replace straight away if they broke. For most people that means a phone, perhaps a laptop, and anything they rely on for work.
Wei Ling's phone is a year old, and she usually keeps a phone for three years. A similar phone costs about S$1,080 in this example. She uses a work laptop, so she leaves laptops off her list.
A cost that comes every two or three years still belongs on the list. The sinking-fund method from lesson 3.2, "Sinking funds: turn a yearly bill into a monthly line", works for these costs too. You divide by a larger number of months.
Divide by the number of months left until the cost is due rather than by the full cycle. If something comes every 3 years and you last paid for it 1 year ago, you have 24 months left, so you divide by 24. If you don't know when something will need replacing, use its typical lifespan as a guess and adjust once you know more.
Wei Ling expects to replace her phone in about 24 months. S$1,080 / 24 = S$45 a month, which is less than she spends on rides in three weeks. When the old phone dies, she can pay for the new one in cash instead of putting it on her credit card.
By the end of this search, most people's lists are about twice as long as the one they wrote from memory. To build yours, open your year of statements and your calendar side by side and work through them one month at a time.
Go through twelve months of statements and your calendar and add every missing irregular cost to your list.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).