How to Get Better at Anticipating Your Financial Needs

One of the most valuable tools for keeping your financial life as stable as possible is to improve your ability to anticipate your future expenses and financial needs. This enables you to take some steps to prepare now for those expenses and thus reduce their impact in the future.

For people who aren’t naturally familiar with planning ahead, this can feel like a major shift in thinking. Many people simply buy groceries as needed by visiting the grocery store and wandering through the aisles to grab items needed for their next few days worth of meals. Many people respond with chagrin when they find an unexpected bill in the mail.

When you live your financial life solely in the moment, you cost yourself a great deal of money. Often, you find yourself with inflated regular expenses like the higher cost of unplanned grocery shopping. You’ll also regularly find yourself “surprised” by fairly predictable financial events, and that can frequently cause people to go into a bit of credit card debt just to get through it.

A much, much better approach is to learn to become better at anticipating financial needs. There are expenses in your life that you know are coming, so if you take at least some action now regarding that expense, you’re going to be able to handle it easier when it comes due.

While this is far from a be-all-end-all list of everything you would need to do to become perfect at anticipating your upcoming financial needs, here are seven things you can do that are quite useful in terms of making upcoming expenses clear to you and preparing yourself for meeting those needs.

Buy Groceries As Though You Won’t Enter a Store Again for the Next Week

It’s easy to go to the grocery store and get items for one or two meals. You just wander through the aisles, picking the items you need for those couple of meals, and you’ll probably grab a few incidental goodies on the way.

The first problem with this approach is that it takes quite a bit more time than necessary. The time spent wandering the aisles as you think about what you need is time that could be spent elsewhere.

The second problem with this approach is that it doesn’t take advantage of what’s on sale. Sure, you might happen to notice a sale and use it in those meals, but you’ll often miss sales entirely or have no idea what to really do with a sale item.

The third problem – and this is the big one – is that it doesn’t take into account what you already have at home in your pantry. You may already have most of what you need for a good meal or two sitting in your cupboards or refrigerator or freezer, but you didn’t even take them into account.

A much better approach – one that anticipates your future needs – is to start off your grocery shopping at home by making a meal plan for the upcoming week. Go online and grab your grocery store’s sale flyer, then build a meal plan that’s based upon what you have on hand and things that are on sale in the flyer. The more you can leverage those things, the lower your grocery bill will be. Try to make a long meal plan, at least a week in advance. Then, make a list of just the things that you don’t have yet that are needed from that meal plan. It’s likely going to naturally include a bunch of on-sale items. Eat a bit (so you’re not grocery shopping while hungry), then take that list, head to the store, and stick to it as you shop.

By anticipating the fact that you will need meals more than a few days in advance and also anticipating that the store will have sales, you can really leverage the value of those sales. By also anticipating that you’ll probably be tempted in the grocery store, writing a list gives you something else to focus on besides those temptations and eating before you go keeps your belly full so foods are less tempting. By anticipating your upcoming schedule and making a meal plan that lasts until the next day when you have time for a grocery trip, you’re saving yourself time during busy moments by taking care of the food-buying task during less busy moments.

Keep a Running Grocery List Near Your Pantry

Keep a whiteboard or a piece of scratch paper posted near your pantry. Whenever you happen to notice something running low in the pantry, add it to the whiteboard. Don’t wait until the item is actually completely out to add it to the board – add it when it’s merely starting to run low.

Then, when you’re getting ready to go to the grocery store, copy down the items on your pantry whiteboard and add them to your grocery list.

This strategy anticipates the fact that you’ll soon grow to assume that you always have certain staple foods on hand (if you don’t already), and keeping a running grocery list like this ensures that you’ll always have those staples so you don’t need to run to the store again to pick up flour or cumin or whatever it is you might need, which amounts to a waste of gas and time and likely extra expenses as you impulsively buy things at the grocery store.

Make a “Target Sale” List on Your Phone and Review It Regularly

Make a list of all of the nonperishable household and food items you use consistently and have to buy more of consistently and keep a general list of those items on your phone. These items should always be added to your grocery list if they happen to be on sale that week. You can actually use this list to cross-check the grocery store flyer while you’re making your grocery list.

For example, some of the items on our “target sale” list include trash bags, toilet paper, hand soap, dish soap, shampoo, conditioner, toothpaste, soap, dry rice, dry beans in a few varieties, basil, flour, sugar, and so on. If we ever happen to notice these items on sale at a price that’s lower than our normal “bulk version of the store brand” price, we stock up. Occasionally the store brand is on sale and that’s time to fill the cart and fill the cupboard.

The reason? We know we’re going to use this stuff. We know we’re going to use toiletries. We know we’re going to use a lot of dry food staples. These things will simply get used around our house, so why not buy them at the lowest price we can find.

Again, this is about anticipating future financial needs, but more in the long term. I know I’m going to need soap. I know I’m going to have to cough up money for that soap. If soap happens to be incredibly cheap right now, I might as well buy that soap for my future self and save some money. So, I load my cart up with soap. Repeat this for everything on that “target sale” list.

Whenever You Pay an Irregular or Infrequent Bill, Add Future Alerts Regarding It

Let’s say, for example, that you pay a property tax bill every six months. Rather than being “shocked” when a property tax statement comes in the mail, stick a reminder in your phone to pop up once a month to remind you that property taxes are coming and you should put aside a portion of that property tax bill now so that it’s not overwhelming when it arrives.

There are many irregular or infrequent bills that people have in their lives that can be handled this way. Property taxes are obviously one. Income taxes are annual bills for most people and quarterly for some. Insurance definitely falls into this category. Vehicle registration falls into this group, too. All of these bills can be unexpected and unpleasant surprises for people who didn’t plan ahead for them.

While this strategy of setting up alerts for such bills doesn’t completely solve the problem, it is a simple step that most people can take that will put them in a position to be more in control of their irregular bills. A much better second step is to automate weekly or monthly savings for those big irregular bills.

Regularly Examine the Condition of Your Car, Home, and Major Appliances

There are few surprises less pleasant than having an appliance fail on you when you need it or have your car break down on you when you need to get to work or have a major home issue strike out of the blue. Those things tend to be incredibly expensive, not just in the repair cost but in the expenses incurred while dealing with it.

Of course, most of these disastrous situations could have been easily avoided if you had happened to notice a much smaller problem earlier. If you noticed that your air conditioning was running a little loud, you might have had a minor repair rather than a major issue, saving you a lot of money and avoiding a few hot nights. If you noticed that your car’s back tire was a little flat, you might have been able to inflate it and get it patched for $15 or $20 instead of having it blow out and cost hundreds and delay your trip. If you had noticed that a few roof shingles were missing, you could have had your roof fixed instead of having major leaks during a storm damaging the inside of your house.

The common thread through all of these stories is the value of examining your house, your cars, and your major appliances for issues on a regular basis. Is there anything noticeably wrong with them? Do they sound different? Does something look different or out of place? Is there any slight issue with the operation? Is there any maintenance or cleaning that should be done?

Noticing those issues early can save you a ton of money and likely avert a crisis that will affect other aspects of your life.

Just set a regular schedule on your calendar to examine your various appliances and cars and different parts of your home. Put an event on your calendar to spend 15 minutes a month carefully looking over your car. Put in another event to spend 10 minutes examining your air conditioner every six months and your furnace every three months, replacing any filters at that time. These tasks aren’t intense and don’t take long, but they can help you identify minor problems when they’re easy to fix and well before they develop into major problems that are expensive, difficult to fix, and interrupt your life.

Not only that, get into the habit of giving things a quick look when you’re getting ready to use them. Glance at your tires when you’re going to the car. Listen to the sounds your car makes when you start it instead of just waiting until it sounds so bad that it grabs your attention. Look at your AC unit when you’re walking through the yard. Just be more aware of your expensive stuff that you rely on constantly.

Become More Honest with Yourself

What does this have to do with anticipating financial needs? The key here is in the word “needs.” The more honest you are with yourself, the more you begin to realize what things in your life truly are needs and which things are actually wants that, in the big scheme of things, really aren’t all that important.

This requires a lot of self-honesty, more than many people tend to apply to themselves in their daily life. We either try to avoid thinking about things like that or we convince ourselves that things we want are essentially needs and thus it’s fine to spend our hard-earned money on them, even if it means letting down actual needs further down the road.

Do you really need this new book at the bookstore right now? What about this new dress? Do you really need this food item? Do you really need to buy that new television next month?

So often, we work our desires into such a frenzied state that we feel like they’re needs, and it’s only through real honesty with ourselves that we recognize they aren’t. That requires reflection and honesty with yourself.

As I’ve mentioned before, one of the most powerful tools I’ve found for this is journaling – simply dumping my raw, unfiltered thoughts out on paper. It forces me to slow down and really think in a raw and unfiltered way about aspects of my life and almost forces me to be really honest with myself about those things. It’s most valuable when I’m honest and critical regarding myself and my own actions, not when I’m being “brutally honest” about others.

Sketch Out Your Life in Detail Over the Next Year (and Beyond)

Another valuable way to anticipate financial needs is to simply sketch out your life going forward in as much detail and with as much realism as you can. What do you anticipate happening or changing in your life over the next few months? Over the next year? Over the next five years?

Simply ponder that question regularly and, then, use those realizations to influence what you do with your money now so that you can make those future events as smooth and as positively impactful as you possibly can.

For example, maybe you’re pretty sure that you’re going to move next year and get a new job. You know this is coming. What can you do today to make that move and job change as smooth as possible? Maybe you can start polishing that resume. Maybe you can pick up a few skills that will help you find a job. Maybe you can start getting to know people in your field in that new area.

Sketching out your future in detail sets the stage for you to be more proactive about those future events.

What’s Next? Action from Anticipation

These strategies are good for helping you start to think in terms of anticipating your financial needs, but how do you start taking action regarding your future financial needs? Again, it really depends on what you observe, but here are some clear steps you can take to handle many situations.

Build an automated “future expenses” fund. If you know an expense is coming in the future, start saving for it now, but make it automatic. Get ahold of your bank or use online banking tools to automate regular small transfers from your checking into your savings account so that you’ll have the money built up when the expense comes due. This works for any irregular expense that’s at least somewhat predictable.

Spend money and time now to fix obvious upcoming problems while they’re small and inexpensive. If you’re looking for minor issues with your car or your appliances or your home and you identify something that could get worse quickly, get it fixed now. Don’t wait around on it. Do it now. Make it a huge priority.

Have some flexibility in your grocery budget so you can afford to stock up on items on sale that you know you’ll use, and then do so when you notice a nice sale. If you normally spend $500 a month on food and household supplies, budget $600 a month for it and use that flexibility to stock up on discounted items. Eventually, you’ll be able to trim that budget line quite a lot because you’ll be on a cycle of buying highly discounted stuff in bulk.

Add something to your to-do list today that will help make something coming in the next year or two easier. Take that vision of your life a year or two in the future and identify something practical you can do today to make that vision a reality. Add that to your to-do list and take care of it today.

Final Thoughts

Anticipating your future needs is a big part of becoming more financially strong and financially independent. As you begin to raise your eyes and look beyond the next few weeks of your life in terms of your money, it gets easier and easier to figure out very wise things to do with your money that will drastically reduce your overall spending in the coming years, enabling you to have more money with which to achieve the big goals you want in life.

It doesn’t come easily and it doesn’t come immediately, but it’s an invaluable change that will make your financial future much brighter than before.

Good luck!

Trent Hamm

Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.