There are all sorts of budgeting methods from those targeting people who want less restriction (percentage-based) to those who want total control (zero-based).
But once you’ve chosen how you want to budget, you need to figure out how often you need to budget.
Here are a few options for how often to budget.
Budgeting monthly is the most popular frequency and the one most people are familiar with.
Most budget apps encourage you to think in terms of your monthly expenses and track things accordingly.
The advantage of budgeting monthly is that it’s a little easier to match up with your typical monthly expenses.
But depending on how much money you have available when you start, you may not be able to cover all those monthly expenses.
This can often stop your momentum before it really gets started, and why I’m not a huge fan of monthly budgets if you’re just getting started.
Budgeting By Pay Period
Budgeting by pay period is often the best way to get started when you’re trying to break the paycheck to paycheck cycle.
By focusing on what your money has to do until you get paid again, you’re able to better manage your spending and start small with some savings goals.
The advantage to budgeting by pay period is that it forces you to prioritize, but also allows you the freedom to start saving.
Budgeting every week may seem like overkill, but research suggests people are actually more likely to stick to a weekly budget than they are a longer-term one.
We have a tendency to spend more quickly when we’re flush with cash so setting up a weekly budget may help you gain more insight and traction into your spending goals.
You’ll also have much more awareness and control by dealing with fewer transactions and judging your progress on a weekly basis.
Budgeting often gets a bad reputation for being restrictive or de-motivating. A weekly budget helps alleviate both of these by keeping things more manageable and preventing overwhelm.
Things just look and feel more do-able on a smaller scale.
The term quarterly is usually used more in business circles and this could definitely be a good budget interval if you’re self-employed. But it’s also good for those that have already built up larger cash reserves.
If you can easily budget out a month, go ahead and budget out the next.
No two months are the same though, so expect that unexpected expenses will pop up regardless of how well you plan.
But if you can at least budget out your bills and typical spending amounts for several months, I say go for it.
This is the surest way to know how much “emergency savings” you’ve got built up. If you can budget out those 3-6 months of bills, you’re pretty well set to start focusing on your other financial goals.
Quarterly budgeting is also good for spotting larger, one-off expenses in the future that might take you by surprise. Things like insurance, birthdays, holidays, vacations and other things you may not think about on a daily basis can pop up to throw you off. With a quarterly budget, you’re more likely to see them coming.
As much as things change in a year, I don’t know that I’d consider this a true budget interval as much as a guiding aspiration.
As with a quarterly budget, if you have the money, go ahead and budget it. But annual budgets are much more about forecasting than they are about planning.
That said, it is a good idea to look at the year ahead and spot any potentially forgotten expenses so you can plan for them well in advance.
Knowing that Christmas always comes in December doesn’t mean you have to wait until then to budget for it.
Just don’t expect an annual budget to give you much clarity or control over your finances if you’re still struggling to get your spending where you want it.
It’s more of an overview of what to expect and a reference point toward tracking your goals.
So How Often Should You Budget?
If you’re just starting out and are behind on bills or constantly overspending, I recommend trying to budget by paycheck until you have things under control.
Even though our family is finally out of the paycheck-to-paycheck cycle, I still prefer this approach.
We could definitely budget out the whole month at this point but I still budget for just the bills and spending we can expect before our next paycheck.
Instead of funding bills further down the road, we spread any extra money across our sinking funds.
Focusing on our sinking funds has helped us prepare for the unexpected much quicker.
However, once those get funded at a comfortable level, then we’ll probably start budgeting by month.
Find Your Own Rhythm
Just as each of us has our own preference for budget methods, we’ll each fall into a budgeting rhythm that suits us.
As long as you’re not missing bills or consistently overspending due to bad forecasting, any timeframe can work for you.
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