Last week I completed our budget until first week of January 2015. Having our budget done at least five months into the future is the only way I like to budget truthfully. My husband created a spreadsheet a few years ago that is calculated so that as I change a number to reflect all through the spreadsheet, I love it! A huge reason I bought a new computer was that this spreadsheet (aka my lifeline) was in danger of getting lost. I honestly don’t know what I would do!
Though it takes some time to do this, there are so many benefits to budgeting into the future. For me the biggest benefit to budgeting multiple months at a time is that when changes or unaccounted things come up (and they always do) I can go to my spreadsheet, input the change (like the wedding gift in September I forgot to budget for) and see how it affects everything else. Sometimes I just need to make minor adjustments like skim a few dollars from other areas to make up the unaccounted for difference and other times I make note of months I may need to ask to pick up an extra shift sort of thing. The advantage to us budgeting on me working four day work weeks is that I can often easily pick up that fifth day to make up any shortcomings.
When I’m making my spreadsheet I also do it based on predicted income so when we actually do get paid and it’s more or less than my prediction I again, input the actual amounts and see how it affects things. Obviously getting paid less than expected is always a bummer but it doesn’t happen often and in my case usually not a detrimental amount, I’m usually good at predicting to about to about a $40 difference.
Both my husband and I are paid bi-weekly and though I have tried monthly budgeting it just doesn’t work as well for us as bi-weekly increments. I think it’s because our pay can vary, I like being able to adjust as we go. At the end of the day it doesn’t make a huge difference but there are two months of the year were we both have ”extra” pays. Because we budget in two-week increments, the entire ”extra” pay isn’t exactly ”free” per se but there are two months where there is a surplus. Budgeting into the future allows me to see exactly where these surpluses are, how they affect everything else and how we will allocate the money. Our extra pay in the fall is used to pay my licensing fee and fund Christmas. This year it will also be allocated to some vehicle stuff as well like tire change, registration and new brakes. Because I know we have these months of extra pays, we use our surplus months in this manner rather than budgeting these items in every month as most people do. It works for us!
Do you budget one month at a time of months into the future like me? What do you like about it?