How to budget for recurring and non-recurring expenses

Creating and maintaining your budget can be like a game of chess. It involves strategy and adaptability. When those unplanned expenses appear, you have to make unexpected moves. But there is also a consistency that comes from the game pieces you can always rely upon. In a budget, these are your recurring expenses.

Business owners know it’s important to stay on top of your recurring costs since, over time, they can just as easily take your budget off track as those unexpected one-off, non-recurring expenses can.

In this article, we explain what recurring expenses are, compare them to non-recurring expenses, share tips for effective budget management, and provide guidance on expense management tools that help you track business costs.

What are recurring expenses?

Recurring expenses are the predictable, ongoing expenses required to operate your business. These regular operating expenses typically come due on a monthly, bimonthly, quarterly, or annual basis.

Properly managing your recurring expenses is crucial to properly managing your budget. When you plan for these more regular financial obligations, you can also ensure you have the funds, think about growth, and budget for the unplanned expenses that may pop up in a normal quarter or fiscal year.

Examples of recurring expenses

These are common examples of recurring costs:

• Rent or mortgage payments
• Utility bills
• Employee payroll expenses, including salary and wages
• SaaS subscription services
• Routine maintenance, upgrades, or repairs
• Regular, ongoing marketing or advertising expenses
• Taxes, including business and property
• Insurance premiums
• Professional services, like legal, consulting, or accounting fees
• Loan repayments
• Office supplies

What are non-recurring expenses?

Unlike recurring expenses, which are regular, predictable, and necessary for your business to function, non-recurring expenses are one-time or otherwise infrequent costs that are not regular or predictable in nature.

These types of expenses are often—but not always—unexpected or unplanned. And while they’re sometimes regarded as a bad thing, it’s important to note that non-recurring expenses can also benefit your ongoing or future success, like a real estate investment or purchasing a patent or other IP.

Examples of non-recurring expenses

Here is a list of common non-recurring expenses:

• One-off equipment purchases
• Unexpected property improvements, renovations, or repairs
• Legal fees for litigation or settlements
• Fines or penalties
• One-time advertising, promotional campaigns, or events
• Costs associated with rebranding, restructuring, or a website design
• Relocation or moving expenses
• One-time training or certification courses
• Insurance claims
• Investments in a new venture or project
• Costs related to disaster recovery or other emergency expenses

Understanding the difference between recurring and non-recurring expenses

Effective budget management is a skill that takes time to cultivate. The more time you spend reflecting on the process and understanding how you can pivot when needed, the better your team will get at it. One of the most essential pieces is understanding how to budget for recurring expenses and how to budget for non-recurring expenses.

Your recurring expenses are predictable, so they are easier to forecast. They give you a sense of your cash flow during a given month, quarter, or year. By tracking those expenses, you know exactly how much is left in your budget to cover the non-recurring expenses.

Unlike recurring expenses, which are regular, predictable, and necessary for your business to function, non-recurring expenses are one-time or otherwise infrequent costs that are not regular or predictable in nature.

Non-recurring expenses are often—but not always—unexpected or unplanned. And while they’re sometimes regarded as a bad thing, it’s important to note that non-recurring expenses can also benefit your ongoing or future success, like a real estate investment or purchasing a patent or other IP.

Common examples of non-recurring expenses

Here, is a list of 10 common non-recurring expenses:

• One-off equipment purchases
• Unexpected property improvements, renovations, or repairs
• Legal fees for litigation or settlements
• Fines or penalties
• One-time advertising or promotional campaigns, or events
• Costs associated with rebranding or restructuring
• Relocation expenses for an office move
• Insurance claims
• Investments in a new venture or project
• Costs related to disaster recovery or other emergency expenses

5 steps for budgeting for your recurring and non-recurring expenses

Budgeting helps you create a roadmap for your future financial health. Follow these five steps to ensure that both your recurring and non-recurring costs are accurately accounted for in your budget.

1. Identify and categorize expenses

To effectively budget for your recurring and non-recurring expenses, you first need to identify what they are. Review your financial statements and records, including balance sheets, expense reports and receipts, and bank or credit card statements.

First, make a list of all regular operating costs. Remember to look for any recurring costs that are billed monthly, bimonthly, quarterly, or yearly, and note the amount and frequency of each. Next, look for non-recurring, one-off expenses from the same period to get a sense of your total expenditures.

Once you have your list, you can begin to organize all the items into categories. Use the list of examples above as your guide and start to categorize the recurring expenses into buckets like:

• Payroll and salary expenses
• Rent or mortgage
• Utilities
• Insurance premiums
• Subscriptions
• Maintenance costs

When you have your list of categories, you can analyze trends or patterns and make informed decisions about your budget.

2. Cut redundant and unused expenses and subscription services

As you take a look at your list and categories, you may find unnecessary expenses. These costs can take a few different forms:

• Multiple subscriptions and/or accounts with the same service or vendor
• Different teams using similar (but not identical) solutions
• Old solutions that are no longer in service, either because the employee using them left or your team has moved on to different processes and workflows
• Services that cost more than they add in efficiency or productivity

The next step in your budget review is to be judicious and eliminate these unnecessary costs. Focus first on SaaS subscription management. Small businesses can lose hundreds or thousands of dollars to SaaS creep when IT spending isn’t centralized and controlled.

3. Set realistic budget goals

Now that you have a better handle on your expenses and areas where you can make cuts, it’s time to set budget goals. Your goals will help guide your future budget planning, so make sure they’re realistic and attainable.

Your recurring expense budget goals should be easier, as you know what to expect. But make sure also to add a cushion for those non-recurring expenses.

When setting your goals, consider the past, present, and future. What does your historical data tell you about your costs? What is your current financial situation? And where do you see opportunities for growth down the line?

4. Automate the process for the future

Once you have a better handle on your recurring and non-recurring expenses and understand your budget goals for the future, consider automation with a business expense tracker.

You’ll save time by using expense management software that continually monitors your cash flow and delivers actionable insights. The right tool can:

• Automatically sort transactions based on merchant and category rules
• Track recurring expenses and spending over time with any given vendor
• Search and filter expenses based on granular criteria
• Identify upcoming recurring payments
• Send notifications in real-time so you don’t have to open a special app or dashboard to know what’s happening

Once this data is visible, it’s much easier to identify where changes are needed and create a strategy to address them.

5. Review and adjust regularly

While it’s always good to create a budget and stick to it, it doesn’t have to be a static document. Schedule regular times yearly, quarterly, or even monthly to review your budget and adjust to any changes your business faces.

Your recurring expenses should stay relatively stable once you have a good handle on them. But, a regular review allows you to take a look at non-recurring expenses and plan for any buffer needed in the future, helping you to manage both types of costs.

Tools for managing recurring and non-recurring expenses

Once you have a handle on your recurring expenses, what resources can help you manage your budget effectively for the future?

There are manual options, like spreadsheets. But if you have many budget line items or a lot of categories to track, this can become unwieldy quickly. Automating the process makes everything more efficient.

Automated expense management tools can help with things like:

• Real-time spend reporting
• Custom approval workflows to provide visibility into significant purchases before they impact your account
• Effective vendor management to gather all your services into one dashboard and identify upcoming renewals, providing a clear view of all your active subscriptions
• Integrated employee credit cards that block transactions from certain vendors or categories
• Features to flag and prevent surprise charges from auto-renewed subscriptions or increased service prices

Of course, with the addition of any tool, there are costs associated and a learning curve for getting your team up to speed. But in the long run, you’ll save time and money as your budgeting becomes more sophisticated and organized.

Take control of your expenses with Ramp

Ramp’s modern finance platform gives you the visibility and control you need to manage your recurring expenses properly. We integrate with leading accounting solutions like QuickBooks and Sage Intacct to help you immediately identify unnecessary spending and take control of your business's cash flow.

On top of that, Ramp Intelligence can give you proactive suggestions for where you can reduce costs. We’ve analyzed millions of business transactions to help you understand whether you’re paying too much for your software subscriptions, for example.

Save money and get a complete picture of your financial data with Ramp.