Creating a budget

[Anonymous]

How do I create a budget?  Things like daycare fluctuates.  Gas usage definitely fluctuates.  Why does it seems cell phone bill fluctuates?  No overages ever!

I know about Quicken or MS Money, but it tracks expenses and doesn't really say "spend only this on gas/food/etc, right?

Thanks.

[SmartCookie]

I don't use an official budget but I do have one in my head and am always trying to cut corners and look ahead to needs and goals.  I think it would be a work in progress and you'd have to play with it for a few months and make adjustments.  For things that vary like daycare... use the highest amount.  When you don't use the entire amount, that money stays in savings either short term or long term depending on your total goals for the year.

Here is a good place to start:

http://cgi.money.cnn.com/tools/instantbudget/instantbudget_101.jsp

To save extra money I have a bazillion tips if you've got kids.  Feel free to PM me, I love to swap family tips.

[SmartCookie]

This is a little more straightforward.  http://www.fool.com/calcs/calculators.htm?source=LN  Start at the 'how much am I spending'.

[Anonymous]

You can get fancy and track every single transaction in MS Money-

I have items that fluctuate as well The "power bill" is that one that come to mind- it was 125 this month in Aug in was close to 700

It also pulls all transactions for all the CC, bank and investments. It has cool budgeting, cash flow and debt reducer,

I balance the checkbook and reconcile every account (down to about 20 in all) weekly- takes about 20-30 minutes.

We are WAAAAAAAAAAAYYYYYYYYYY over on the Xmas budget and groceries.

It has a free DEMO as well- the demo does not have the online services (the best part)
http://www.microsoft.com/money/freetrial_info.mspx

[tbenz6876]

I use Quicken 2008. It has the same features as MS Money. I am real bad about not balancing the checkbook so it makes it very hard for me to keep a budget.

[Anonymous]

When creating a budget that includes items that flucuate,  what you should do is take the last four months or so,  and calculate the average cost of them

 For example   Day care ;

August  -   $200

Sept.   -   $150

Oct.   -   $220

Nov.   $180

Average cost of day care would be $187.50

Message Edited by Boswd on 12-10-2007 06:35 AM

[Anonymous]

I agree with Bowsd, I take a similar approach except I go more by the median than the average. For an odd number of items, the median is the number in the middle, go figure. But for an even number of items such as in Bowsd's example it would be the average of the middle two numbers (200 and 180) which is $190. This is pretty close to the average $187.50. It depends on your situation, sometimes the median number is higher than the average and vice versa but the gap can become wide. For example your median can be 198 while your average is 150 if you take alot of months into account.

The median is easier to eyeball and at least in my case has been a better approximation to what I will typically spend on a bill. For minimum balances on CC or other accounts you might want to or need to pay little by little, I go with the MODE (taking it back to basic arithmetic). That's the number that occurs most often in a set which typically tends to be $21 for some of my cards. But I guess if you had this case, it wouldn't be much of a fluctuating bill.

Of course going with the highest you've ever paid is always the safest amount to budget for. I find the best approach if you aren't going with the highest amount is to be aware of your bills that can be compressed if necessary. These can be food, gas, and entertainment, etc. If your bill comes for energy and you were expecting about $200 and its $500. Quickly adjust your budget and come up with ways to compress these. To compress the food bill, make a light lunch at night to take with you to work the next day so you don't have to eat out. To compress the gas bill, put the car keys up for the night when you get home after work. Sit down and write up a list of everything you need to do before driving away from the house. Nothing inflates a gas bill more than going to Walmart then back home, then going to the mall next to Walmart, then back home, then going to the food place next to the mall and heading back home and turning around to get something you forgot to get at Walmart. Compressing the entertainment bill is easy. DON'T DO ANYTHING. Its fun after a while. You find ways of being creative and you can actually see the money your not spending on stuff you don't need.

Message Edited by berraco58 on 12-10-2007 08:04 AM

[George2037]

I bought an Excel "How to" book and built a spreadsheet.  I have every bill I pay Monthly and yearly built into it and, basicly if I spend money it goes in there.  I even went as far as building "Estimated" pay checks (I'm hourly and get a ton of OT) so I know where I stand on each pay check.  Each Page represents a month, and all the info from one month carries over to the next page (month).  All my intrest rates, minum payments, target payments, everything is in there.  If anything effects my money flow it's in there.

If I spend $10.00 today on Lunch I enter it in the Spread sheet and can look at January 2009 and see how it effects my bottom line.  It's a bit extreme but I like to go overboard sometimes , plus it helps me Identify any "Butterfly Effects" that may happen.

One of my lastest benifits have been when I switch insurance companies and saved $1200 for the year, I can see the direct effect on my bank balance in 12 months avoiding the typical "Where did it go" question.

I've tried MS Money, and Quicken.  Although both are great programs, I didn't like the options and the complexity of them.  With my spreadsheet I update all my info when I make a payments each month, and my Bank Ledger is kept online through my bank (They even keep digital copies of my checks online) for 7 years, all I need is the numbers.

[George2037]

"DON'T DO ANYTHING"

haha, funny you said that.  I went out and spent $500 on an XBOX 360 and just sit home playing it and watching movies.  I figure I've saved $100 a weekend by staying home, and not to mention the beer is cheaper and safer (DWI's are expensive) to drink at home

For Utilities specificly electric, see if your provider offers a Budget Billing plan.  BGE does and I enrolled in it last year after getting $75 bills all summer and a $350 in November.  Now I pay $223 every month and at the "Reset Month" once a year I get any extra I've paid back with intrest. 

If at anytime you use up your balance and go over you will have to pay that extra amount that month, but currently going into Winter I've got a $600 positive balance and doubt I'll use it all up before winters over.  I can watch it and if it gets close to being in the negative I can account for it 60 days ahead of time instead of the typical ' Suprise your bill went up $200 and we need you to pay it in 20 days bill '

[Anonymous]

Quicken and money have budget functions with alerts when spending exceeds your budgeted amount in a category (like Auto:fuel).  I found for stuff that fluctuates using the 12 month average as a budget amount works (total for the year / 12). When an alert pops I know if I'm just going hog wild or it was a legit expense this month (is my gas usage up because I'm showing houses or is it because I'm having fun running around) - either way I know to try to curtail whatever it is I'm doing to not get in real deep.

Message Edited by Lady_Scarlet on 12-10-2007 12:02 PM