Forecasting Your Budget

As I mentioned before, I'm a little nuts in terms of how insistent I am with being organized. So aside from planning the stuff I do, I do my budgeting with slightly more detail than most as well.

I thought it might be a little more detailed than most household budgets (even though I was still single when I did it!). But I didn't really care; I liked it that way.

And I thought it might be worth sharing here today.

Anyone can make a budget according to whatever style fits them. But they inevitable have one thing in common: they answer "how much". If it doesn't include actual or estimated costs then it's not a budget, right?

What's different with mine is I also track "when". By when, I mean frequency: How much of the product do I use in a month, and divide the total price by 2 (because I'm paid twice in a month).

Essentially, I'm forecasting my expenses long-term and making sure my current income can cover it.

I did this because I had a lot of recurring expenses that came up once a month or once every few months. I wanted to make sure that I saved enough money from my salary every payday, so I could pay cash when the purchase is due. And sure enough, when I first did the math, I realized I needed a 500 peso salary increase just to meet my spending!
Forecasting Your Budget. In this post, I share how balance my budget and forecast my expenses long-term and making sure my current income can cover it. I even have a free sample budget template you can use.

So if I had not done that, I would probably have ended up with a credit card bill. It would have been a small one, sure. But according to my budget, it would have been a regular "budget deficit." So it's not far fetched to think it would have ended up ballooning until I got my 13th month pay - which I of course would rather spend on something else.

So I continued preparing my budget this way. 

And here's an example of how my budget is computed:
Forecasting Your Budget. In this post, I share how balance my budget and forecast my expenses long-term and making sure my current income can cover it. I even have a free sample budget template you can use.

You can also download a sample budget template here.

It might seem complicated, but it's really just the start that's hard.

Basically, I track every expense down to the pay-period level. You can adjust this if you get paid once a month or so. Or, if you're a free-lancer, it can be used to check how much you need per month (and then save the rest for next month). But I guess it would work best for ordinary employees

However, this is really meant for balancing your budget. If your goal is to save, the best option is to pay yourself first and remove that amount from the Income field. From personal experience, it's very easy to stretch your expenses to meet your budget, but it's exceedingly hard to shrink your expenses to increase your savings (at least by just crunching numbers).

How about you? do you have budget-balancing tricks up your sleeve? Drop a comment below and share your tips here!


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photo credit: kenteegardin via photopin cc

7 comments:

  1. That's so cool! I wish I'm into spreadsheets and such so I don't have to write down lines and all but I refuse to learn! haha! I'm more comfortable with paper and pen, to each his own, diba? hehe

    Strangely, I don't budget, but I do keep track of everything that goes out.

    Great strategies you have!

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    1. Actually, I like pen and paper too... I just had a hard time doing the math myself :D hehe

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  2. I usually use the 10-20-70 rule. Whenever I get my paycheck, I set aside the 10% for Tithing, then set aside another 20% for may savings/investment/pay myself first while the 70% gets divided into two, 10% goes to our emergency fund, then the 60% goes into expenses. Of course there are times when my 60% won't be able to cover my expenses (depending if their would be overtime pay, weekly allowance, night shift differential/premium). When that happens, I just make sure to cover my expenses first after removing the 10% tithes. I think it all boils down to simplifying our lifestyle. :)

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    1. Hi Alvs!

      I follow the rule too, but this is for the remaining 70%. Just like you mentioned, there are times when the 70% (or 60% in your case) might not be enough. It doesn't have to be that way.

      With my relatively simple budgeting technique, you can already foresee a shortfall and adjust accordingly.

      In the end we'll still end up simplifying our life, but it's better to do so beforehand rather than after the fact, right?

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  3. Hi Carlos,

    Saving money is one of my biggest favorites that comes next to investing. I'm a working mother of four kids and I make sure I put things in order especially our finances. Physically writing down the expenses just like your spreadsheet is an excellent way to track down finances. This helps budgeting a clearer picture where you are at. Proper discipline should be observed, of course. I just so love saving money and it's worth sharing these tips to the rest of the population who don't know how to do it. Simply amazing!

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    1. Hi Anna!

      I most definitely agree. Especially about discipline. Saving isn't as effective without it.

      Great site by the way, I really love the creative (and numerous!) ways you have on saving money.

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  4. Budgeting is a must. I actually get peace of mind from it knowing that I'm covered all the time. I do my budgeting in an Excel spreadsheet, too. Since I know the frequency of my expenses and the due dates of our utility bills by heart, I don't write it anymore. I just divide my weekly salary based on what needs to be paid first. It's a sort of "money balancing" cycle which I have fun doing monthly. :)

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