I was thinking about this the other day. And I was thinking "is this really true?" So, I started going through my old budgets.
My big fixed costs were the same from month to month (mortgage and health insurance). Even my variable costs were similar (like food).
But the biggest difference was seasonal costs: Paying for preschool for Sept – May, paying for swimming lessons and camp in the summer, birthday presents in late spring, holidays in November and December., utility costs (I don't use heat in the summer), etc.
Also since I am hourly paid, my paychecks fluctuate in the number of hours I work. Over the last 2 weeks I have worked 70% of the hours I normally work. Also, the last paycheck included FICA, 401 (k) contributions, and deductions for health insurance (last year I paid my own from month to month).
In April, I'll get money back for taxes or pay more. This will also have an affect on my income along with any vacations or holidays.
The answer for me is pretty obvious. Since expenses and income can change from month to month, the budget is in constant flux. Sure, there are parameters. I mean my budget isn't moving $10k a month but it could move a couple of thousand, especially a month with an extra paycheck.
I usually budget on a weekly basis. It's easier for me because I get paid weekly and divide my pay into envelopes. I used to have to put 33% of my take home into the mortgage and healthcare envelopes, 33% into debt reduction, and use the other 33% for household expenses. This was pretty much set for the last quarter.
January is a new year. I am still doing the weekly budget and of course change in the budget is constant. It might take me a little time to adjust to the budget again and then it will stabilize for a few months. But in the end, the goal is to live below what I take home and not have any of my envelopes in the red.
So far, so good.
A budget is different every month
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But yes, it does change monthly. I have to tweak my budget constantly depending upon what's going on and what I'm trying to prioritize.
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Everything else I budget annually. Much simpler. I set aside $1k/month and it is always enough. I re-evaluate it annually. Add up expected bills and divide by 12.
I think that is why I am not a big fan of "budgets." I care that expenses are in the ballpark where I Want them. That's good enough for me. Trying to predict every category down to the penny is too much for me. Some things will come under, some over, and that's good enough for me. I think a budget can drive you crazy.
January 6th, 2009 at 02:17 pm 1231251430
But if you are frugal to began with, it probably doesn't matter that much.
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A) I am not guaranteed any number of hours per week/month.
B) We are on what the company deems an 'elect to work' contract.
C) My hours can fluctuate and whether a certain co-ordinator likes you or not and can reflect the number of hours I get and they often play favorites. D) because of constant change in life I can be loaded with clients and all of a sudden I can lose 3 in the same week.
E) If I am sick or need a day off for an appointment or car repairs etc..., I just plain and out don't get paid.
So I don't really have a guaranteed amount of money to work with monthly.