How I Budget
I’m not sure why a lot of people cringe at the thought of budgeting. It is a good way to get your finances under control. In order to budget properly, you should have an understanding where your money is going. An hour or two of your time can change the way you look at your finances.
I budget based on my bi-weekly paycheck. I take my monthly expenses, divide them into two, and put them into appropriate savings accounts. The advantage of this is I am not tempted to spend the money. I find that if it’s in my checking account, I am more likely to spend it. The other advantage of my bi-weekly savings is that I will build another monthly payment over the course of a year. This is particularly useful for building that extra mortgage payment every year. Some mortgage companies charge you to change your payments from monthly to bi-weekly.
Budgeting for Variable Bills
I’m still working on this area in my personal finance. One example of a variable bill that I have is the gas and electric. I’m thinking about taking the average price of the bill over the past year and putting that amount away into another savings account. So when my bill is $50 in the spring or $250 in the winter, I will have enough money to cover it all. Sure, I can assume the worst case and always put away $250, but that will limit my cash flow. Have any suggestions?
How do you budget?
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January 21st, 2010 at 9:13 pm
I budget with one savings account. You have a better measure for budgeting than I do. Good contribution. I think I need to put more thought into it.
January 21st, 2010 at 9:29 pm
I had one savings account until about a year ago. I find that having multiple, targeted savings accounts keeps me organized. I will go into more detail about how I break down my savings accounts in another post.
January 22nd, 2010 at 7:36 am
I have a hard time bugdeting – too many unknowns..
January 24th, 2010 at 10:53 am
I know what you mean. Are these constant expenses from the same company? Right now I’m working on a spreadsheet that will allow me to estimate how much I need to allocate each month.