Yearly Bills: How to Track and Save for Annual Bills

To handle yearly bills, list every bill that isn't monthly with its amount and due month, add them up, divide by 12, and move that amount into a separate savings account every month. When a bill comes due, the money is already there. For a typical household the yearly total is a few thousand dollars, so the monthly set-aside is a few hundred: small enough to plan for, big enough to wreck a month if you don't.

Monthly bills are easy to remember because they come back every few weeks. Yearly and twice-a-year bills are the ones that cause overdrafts and credit card balances: the car insurance renewal, the registration, the annual subscription that renews on a card you forgot about. A yearly bill tracker is simply a list of those bills with a plan for paying each one.

Step 1: find every non-monthly bill

Go through the last 12 months of bank and card statements, not just two months, because that's the only way to catch the once-a-year charges. Look for:

• Insurance paid in lump sums: car (often every 6 months), renters or home (if not in your mortgage escrow), life.
• Vehicle costs: registration, inspection, maintenance and tires.
• Annual memberships and subscriptions: shopping, warehouse club, streaming, software, cloud storage, domain names.
• Seasonal spending: holidays, birthdays, back-to-school, summer camp, travel.
• Irregular but predictable: medical deductibles and copays, vet visits, home repairs.
• Taxes and fees: property tax if you pay it directly, estimated tax payments if you're self-employed, professional licences.

Step 2: a worked example

Here's one household's list. The monthly set-aside is the yearly amount divided by 12.

$4,140 a year is $345 a month. Paid every two weeks? Divide by 26 instead: $4,140 ÷ 26 = $159.23 per paycheck. Paid weekly: $79.62. The yearly expenses calculator adds up a list like this for you, and the sinking fund calculator works out the set-aside for a single goal and date.

Step 3: starting late? Catch up, then level out

If a bill is due before you've saved for it, divide what you still need by the months left. Say the next $720 car insurance payment is due in 4 months and you have nothing saved for it: $720 ÷ 4 = $180 a month until it's paid. After that, drop back to the steady $120 a month ($1,440 ÷ 12), which covers both payments in the following year. Do the same for each bill and you'll be level within a year.

Step 4: keep the money separate

Keep the set-aside in a savings account that isn't your everyday checking, ideally at the same bank so transfers are instant. Name it "Yearly bills". Set an automatic transfer for the day after payday. Some people keep one account per goal; one account plus a running list of what each part is for works just as well and is simpler.

Step 5: put the due dates where you'll see them

A yearly bill only works if you know it's coming. Add each one to your bill list with a reminder two weeks ahead, so there's time to move the money and to shop around (insurance renewals are the best time to compare quotes). The free online bill tracker repeats bills yearly or every 6 months and exports them to your calendar; the bill calendar shows the whole year at a glance; and the printable bill tracker prints all 12 months at once if you prefer paper.

Should you switch to monthly payments instead?

Many insurers and services offer monthly billing, but it often costs more: installment fees or a higher total than paying in full. Ask for both prices. If paying yearly saves money and you can set the amount aside, paying in full is usually the better deal. If the price is the same, monthly payments remove the need to save, but they also add one more bill to track.

Your yearly bill tracker, in four columns

Bill, due month, yearly amount, and monthly set-aside. Add a fifth for "paid on" if you like a record. Review it once a year (January works, or the month after your biggest renewal) and whenever a price changes. That's all it takes to stop annual bills from being a surprise.