The bills that only come once a year

Annual bills hurt for a reason that has nothing to do with affording them. They are missing from the monthly picture eleven months of the year, so the month they land looks like a bad month rather than a normal one. The fix is arithmetic: divide each by twelve, treat that twelfth as a monthly cost, and put it somewhere it will still be there in March.

Which ones they usually are

• Home and contents insurance.
• Car insurance, road tax, the service, the annual test.
• Travel insurance and breakdown cover.
• Annual subscriptions bought at a discount, which is how they became annual.
• Professional memberships, unions, licences.
• Anything with the word renewal in the email subject line.

The arithmetic that stops it hurting

Add every annual bill you have and divide by twelve. That figure is a real monthly cost that has been invisible in your monthly total, and seeing it is usually the point at which a household stops describing itself as bad with money and starts describing its bills as badly spaced.

Two hundred for contents, six hundred for the car, ninety for a couple of annual subscriptions, and you have found about seventy-four dollars a month that was never anywhere.

🧮Do this once, in one sitting. It is the highest value twenty minutes in household budgeting and almost nobody does it, because there is no month in which an annual bill demands it.

Where to keep the twelfth

Anywhere that is not the account you spend from. A separate pot, a second savings account, whatever your bank calls it. The mechanism matters much less than the separation, and the separation is doing all the work.

If moving money is a hassle, the next best thing is to keep the twelfth in the plan rather than in an account: count it as spent in your monthly total, and let it accumulate in the balance you already have. Weaker, and much better than nothing.

The renewal that gets forgotten twice

Annual is long enough to forget the price entirely, which means it is also long enough for a rise to pass unnoticed, and then for a second one. That is why anything on this list wants a date next to it and a check when the date arrives.