Budget - Monthly or Yearly?

[Mike or Penny Novack]

David Carlson wrote:

>On 12/9/2014 2:46 PM, Chris Henderson wrote:
>  
>
>>I’m setting up expense only annual budget for 2015 and would like some
>>advice.
>>
>>Is it better to setup the budget Annually or monthly? I only care about
>>what I spend in total every year, not what I spend every month. Some items
>>are hard to gauge monthly (even with the estimate option) - gas, grocery,
>>postal, brokerage, clothes, parking etc.
>>    
>>
Although I am not using gnucash for budgeting, we had that too.

If your income and expenses are regular on a monthly basis, if your cash 
flow is critical on a monthly basis, then monthly makes sense.

On the other hand, if your income is seasonally "lumpy" and major 
expenses are paid in lump sums annually, then annual makes sense.

Unfortunately, often not so simple, with some income/expenses monthly 
and others annually. What you have to do in that case is to decide which 
you will use and adjust accordingly. If you are doing an annual budget, 
you need to multiply the monthly ones by twelve and if a monthly budget, 
divide the annual ones by twelve. It is probably the latter which can 
seem confusing if you don't recognize that it will then be normal for 
(the annual) items to be either ahead or behind except in the month 
where they are actually received (if income) or spent (if expenses).

You can, of course, do more than one budget, including some things in 
the monthly budget and others in the annual budget.

Michael D Novack