We put the same idea to work when planning for larger expenses that occur only once every few years. Anticipating we may need a new car in five years, for example, we've begun to put money away for it.
To work, this budgeting must be based on realistic estimates of future expenses. To make these realistic estimates, we need to know what our current expenses are.
All this brings me back to the point I've been making for years and emphasizing recently during these difficult times: Keeping detailed track of our expenses is the essential first step to get our personal finances under control.
Anticipating expenses also lets us spot opportunities for savings. Knowing when insurance premiums come due, for example, gives me time to shop around for the best coverage options and rates. I never renew an insurance policy without first checking competitors' quotes.