periodic expenses
Irregular costs that occur occasionally rather than monthly — car repairs, medical bills, and annual subscriptions.
Example
“Sinking funds for periodic expenses prevented them from derailing the monthly budget.”
Memory Tip
PERIODIC — irregular but predictable. Save for them monthly so they don't surprise you.
Why It Matters
Periodic expenses are crucial to account for in your budget because they can catch you off guard and derail your financial goals if you are not prepared. Setting aside money each month for these irregular costs helps you avoid going into debt or depleting your emergency fund when they inevitably occur.
Common Misconception
Many people assume that periodic expenses are so unpredictable that they cannot be budgeted for at all. In reality, while you cannot know exactly when a car repair will happen, you can estimate average annual costs and set aside money monthly to cover them.
In Practice
If your car typically needs repairs costing around 1200 dollars per year, you should budget 100 dollars per month for car maintenance. When a 500 dollar repair comes up in March, you have the funds available, and you continue setting aside 100 dollars monthly so you stay prepared for the next unexpected expense.
Etymology
From Greek 'periodikos' meaning recurring at intervals plus Latin 'expensa' meaning money spent.
Common Misspellings
Get a free financial plan from a real advisor
Related Terms
More in financial planning
Other financial planning terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.