Need $10,000 to renovate your kitchen? How about $2,000 to buy a new computer? Big expenses happen. Here's a way to save for large, one-time, non-budgeted expenses:
Set up a separate savings account (try ING DIRECT (9/9/09 APY: 1.3%), SmartyPig.com (9/26/09 APY: 2.0%), or your existing bank) with a goal and specific dollar amount in mind. For one full year (or as long as it takes), dedicate all of your unexpected checks and deposit them in this account. "Unexpected" might mean a $200 birthday check from grandma, insurance disbursement, or a tax refund. You can save many thousands of dollars this way, and it shouldn't affect your allocated budget because it's all unexpected. If you simply deposit this money into your checking account, you'll likely spend it on that cashmere sweater you've been eyeing. And you don't really need that sweater like you need a new computer.
What's SmartyPig? It's not a bank like ING DIRECT. It's like a public piggy bank and has some unusual requirements (for example, requires automated contributions). You can read an independent review here: SmartyPig Review.
What's your next big expense?