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# Plan for occasional expenses

Including occasional expenses like clothing, gifts and vacations in your budget means you’ll have the money to pay for them when the time comes. If you choose to put these expenses on your credit card, you’ll be able to pay off your credit card in full and avoid paying interest on your purchases.

## How to budget for occasional expenses

1. Create a separate category for each expense in your budget. Don’t group them under “Other” or “Miscellaneous”.
2. Calculate what you think you’ll spend on each category over the year.
3. Divide that number by 12, and put the amount in your monthly budget. If you don’t use the budgeted amount each month, put the extra money aside until you need it.

## Example: budgeting for a vacation

### 1. Create a budget

Make categories for your vacation costs, including travel, accommodation, food and entertainment. Estimate how much you'll spend on each and add up your costs. As an example, let’s say your vacation will cost \$1,000.

### 2. Figure out how much you need to save

If you’re planning on taking your vacation in 6 months, you’ll need to start saving \$167 a month.