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A budget is different every month

January 5th, 2009 at 12:32 pm

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.

8 Responses to “A budget is different every month”

  1. Petunia Says:

    I have also noticed the cyclical nature of some costs. It makes budgeting an interesting adventure!

  2. Aleta Says:

    I think that's why Dave Ramsey says to find a place for each dollar. I usually will do a monthly budget for Holiday spending from Jan - June and the vacation budget from July to December for the coming year. My holiday spending is already in place by the end of June and my vacation money is already for the new year of 09 by Dec of 08. I generally just escrow this money money for the homeinsurance, home maintenance, auto maintenance, auto insurance, small house furnishings, even though this will not come due monthly. I put it into the money market fund. I also have money at the end that I categorize as "unallocated funds" or as Dave Ramsey would call "blow money". This we can use for photo's, misc expenses, etc.

    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.

  3. Aleta Says:

    Oh, BTW, I do a budget for 4 or 5 weeks of the month. (Depending upon how many weeks in month, but I do the allocating one week at a time.

  4. KellyB Says:

    I've found using and funding a separate subaccount for quarterly or annual bills helps me keep on track. I list my subaccount needs and costs annually (ex. AAA fee $90 in Feb, vacation $3600 in June, Xmas $2400 in Dec, etc.) I add them all up to determine how much I need to have auto transferred into the "Subaccount Savings" account in order to reach my goal. Then it just happens automatically. Of course, the 1st year was more difficult, just determining what was coming up and how much was needed. But once I wrote it down, I realized it was only about 14 bills. Now I'm able to keep them funded well ahead of time and it has made things like Car Repairs and Home Maintenance much better...I know the money is there when needed, then fill it back up if I use it.

  5. whitestripe Says:

    i work out all my bill costs per year and divide by 52, then put that amount away each week. it means i always have the money for bills no matter what. my expenses fluctuate, but my budget technically doesn't. Smile

  6. monkeymama Says:

    True. I budget fixed expenses (& things like groceries/gas) monthly.

    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.

  7. merch Says:

    monkeymama - Interesting. Budget vs estimating. Do you fnd that you could probably cut your spending if you went on a traditional budget?

    But if you are frugal to began with, it probably doesn't matter that much.

  8. Brenda Says:

    Where I have a difficult time budgeting is:
    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.

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