Wednesday, April 15, 2009

Monthly Budget - Works For Me

I've written before about how I use to keep an annual budget and the problems I had with it. So this year I decided to start keeping a monthly budget. This method is working so much better for me and it keeps me much more conscious of my money.

Near the end of the month I sit down and review my budget for the current month and how reality compared to the budget. Then I start working on my budget for the coming month. A lot of our expenses are the same from month to month (mortgage, insurance, Internet, etc), but there are also a few that vary. When I'm putting together my new budget I find it easiest to use my previous month's budget as a template. I can look at the last budget, see what areas we over or under spent in and adjust the budget accordingly.

I have personally found it so much easier to keep up with my finances when I review our budget monthly. Having an annual budget left too many gaps and places for money to slip through. Now that I'm checking the numbers monthly I know pretty quickly when money starts slipping through the cracks. Monthly budgeting definitely works for me.

For more Works For Me Wednesday, head over to We Are THAT Family.

2 responses:

Single Income Dual Kids said...

Right on! I make a template with 3 months at a time on it--enough room to write everything in and can see at a glance if we're hitting the mark or overshooting. Do you divide your annual bills (insurance, taxes, etc.) by 12 or account for them some other way? Thanks.

Buffie said...

I take the total of all my non-monthly bills for the year, divide by 26 (number of pay checks I get a year) and have an automatic transfer setup to move that money to a special savings account every time I get paid. That way I have the money on hand when the bills come due. In my monthly budget I use the figure that I transfer to savings as the expense because to me that money is already "spent" since it's allocated to a specific expense.

I realize this method might be a little complicated for some people, but it's what works best for me.