You can budget for recurring expenses by listing and categorizing all your recurring costs, determining their frequency, and deciding how much money to allocate to each expense. You should also analyze your recurring costs to see if you can reduce spending and make room in your budget for any non-recurring expenses.
Since recurring expenses happen regularly, it is important to budget for them so you can keep track of how much you’re paying and manage your money more efficiently. You can learn more below.
What Is a Recurring Expense?
A recurring expense is a financial obligation that occurs on a regular basis, typically every month but weekly or yearly in some cases, too. Recurring expenses can be the same amount every month, such as your rent or insurance premiums, or they can be different amounts each time, like your grocery costs or utility bills. The main idea is that you can expect to pay these costs continuously.
Examples of Recurring Expenses
- Mortgage or rent payments
- Loan payments
- Subscriptions and memberships
- Insurance premiums
- Ongoing child care costs
- Groceries
- Gas
- Utilities
How to Budget for Recurring Expenses
1. List all your recurring expenses.
Make a list of all your recurring expenses that you have in a typical month, such as your rent or mortgage payment, subscriptions, and loan payments. You can review your bank statements and credit card bills to see exactly what recurring expenses you have and the amount you pay for each. Alternatively, you can use a budget app, like the WalletHub app, that can detect your recurring expenses.
2. Categorize your recurring expenses.
Put your recurring expenses into groups. For example, you can separate them into needs and wants, or monthly and annual recurring expenses. Categorizing your expenses allows you to get a better understanding of where your money is going and helps you identify areas where you are overspending.
3. Determine the frequency.
Many recurring expenses occur monthly. However, some may occur weekly or yearly. Note how often you must pay for the expense in your budget. It may also be helpful to use a budget calendar, so you can visually see when a recurring expense must be paid.
4. Allocate money to each expense.
Figure out how much of your income to allocate to each recurring expense. A recuring expense can be fixed (the amount stays the same from month to month) or variable (it varies from month to month). For fixed, recurring expenses, you can list the amount you pay each time. However, since variable expenses tend to fluctuate, list the average amount you paid for the past 12 months.
For recurring expenses that happen yearly, you can divide their annual cost by 12 and include that amount in your monthly budget.
5. Track your spending.
You could use tools like Microsoft Office and Google Sheets that allow you to track your recurring expenses in a spreadsheet. But budget apps, such as the WalletHub app, can be easier and less time consuming to use than spreadsheets since you may be able to sync your financial accounts to have your expenses automatically tracked.
6. Review and analyze your recurring expenses.
Regularly review your recurring expenses and see if there are areas where you can reduce spending. For example, you may notice you are unintentionally paying for two separate gym memberships, or that you are paying more than $200 a month for all your streaming services. Analyzing your recurring expenses helps you understand where your money is going and can help you save money on things you no longer need.
To learn more, check out WalletHub’s guide on how to make a budget.
Recurring vs. Non-Recurring Expenses
| Expense Type | Recurring | Non-Recurring |
| Frequency | Set intervals (weekly, monthly, annually) | Sporadic or one-time |
| Ease of budgeting | Easy since the expense is expected | More difficult since the expense is not standard |
| How to budget | Include the monthly cost in your budget | Set aside savings to cover the cost |
| Examples | 1. Rent 2. Utilities 3. Subscriptions 4. Gym memberships |
1. Car or home repairs 2. Medical bills 3. Vacations 4. Birthday presents |
Unlike recuring expenses, non-recurring expenses tend to be one-off purchases or unexpected bills, like for car repairs. Recurring expenses may be easier to plan for since you should be expecting these costs. Non-recurring expenses, on the other hand, may require some contingency planning like having savings to pay for an unexpected expense if you have no other money available. This can help prevent financial setbacks caused by the expense.
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