Insurance Costs in Your Personal Budget: A Practical Guide to Recording and Analysing

When talking about household or personal budgets, we often stop at daily bills, food, utility bills… but there is an item that frequently hides in many accounting books: insurance. Whether it is health insurance, car insurance, or home insurance, each adds a fixed or variable financial burden. If you do not include it in your accounts, it will control your budget without you realising.

Why should we record insurance expenses?

Your insurance is not just a random payment; it is an investment in protection. But like any investment, it needs regular review. Once you record each premium in a personal accounting book, you can:

• Know the exact proportion that insurance consumes from your monthly income.
• Compare available offers and discover opportunities to reduce costs.
• Anticipate financial gaps when the contract renewal date approaches.

The result: greater ability to make informed financial decisions and avoid surprises.

Step 1 – Gather all insurance documents

Start by gathering everything related to your insurances. If you receive electronic policies, save them in a dedicated folder on your phone or computer. If you have paper policies, scan them or use a receipt-scanning app to unify the images into one PDF file. The idea is that everything is in one place, so you can refer to it easily.

Step 2 – Categorise the expenses

Insurances differ by nature and payment periods. It is preferable to classify them into clear categories:

• Health insurance – usually paid monthly or quarterly.
• Car insurance – may be annual or semi-annual.
• Home/contents insurance – often paid once a year.
• Life or assistance insurance – depends on the contract terms.

Write in a simple table or in a personal accounting app (such as Money Manager or Excel) the following column: category, insurer name, premium, payment date, contract duration.

Step 3 – Enter the premium in your daily accounting

When entering the premium in your ledger, be sure to add a “premium type” column so you can later filter the data. Example:

| date       | category   | company           | premium (SAR) | note              |
|------------|------------|-------------------|---------------|-------------------|
| 01/01/2024 | health     | Amanah Insurance  | 250           | Monthly payment   |
| 15/01/2024 | car        | Allianz           | 1200          | Annual payment (first instalment) |

Here you can see the monthly premium for «health insurance» added as a fixed expense, while the «car insurance» premium is recorded once a year but is spread over 12 months to obtain a monthly average.

Step 4 – Calculate the monthly average for each category

The process is simple: divide the annual premium by 12. If the premium is quarterly, divide it by 3. This way, any non-monthly premium becomes a fixed figure showing its impact on your monthly budget. Example:

• Car insurance premium: 1500 SAR per year → 1500 ÷ 12 = 125 SAR per month.
• Health insurance premium: 300 SAR per month remains unchanged.

After calculating the average, add it to a “Monthly Average” column in your table. You will then easily obtain the total monthly insurance expense.

Step 5 – Effective analysis

Now you have the data, it is time to use it in a simple analysis:

• Insurance proportion of net income: Divide the total monthly average insurance expense by your net income, then multiply by 100. If the proportion exceeds 15‑20%, you may need to review the contracts.
• Comparing offers: When renewing the contract, obtain quotes from at least three companies. Use a comparison table to identify the lowest cost while maintaining the required level of cover.
• Identifying saving opportunities: Cancelling excess cover (for example, adding unnecessary cover to the car) or increasing the excess (deductible) may reduce the annual premium by a few hundred SAR.

By following these steps, you will not only be recording expenses, but you will also be controlling them.

Step 6 – Link expenses to savings goals

Every time you add an insurance premium to your accounting, it becomes easy to link it to one of your financial goals: an emergency fund or an investment. For example, if the average insurance expense is 400 SAR per month, you can allocate part of your savings goal to cover this amount in case of temporary inability to pay.

In this way, the premium becomes not an unknown burden, but part of the comprehensive plan that supports your financial stability.

Practical tips to reduce insurance costs

1. Bundling insurance: Some companies offer a discount if you bundle health, car, and home insurance in a single policy.

2. Increasing the excess: The higher the excess (deductible) before compensation begins, the lower the premium. Make sure the excess is within your ability to pay.

3. Annual review: Do not let your contracts renew automatically. Review your needs every year, especially if your health condition or car type has changed.

4. Taking advantage of discounts: Some discounts apply to students, or to membership in professional associations. Always ask about available offers.

Conclusion

Insurance is one of the pillars of financial security, but that does not mean it should remain in the dark. By entering the premium in your personal accounting and analysing the proportion it consumes from your income, you control the flow of money and can make informed decisions to reduce unnecessary expenses. Use the available digital tools, and do not hesitate to review contracts regularly. Every new spring brings an opportunity to update your financial portfolio, and make sure insurance costs are accurately calculated in your table; because clear figures are the foundation of sustainable financial planning.