Budget - Monthly or Yearly?

[Chris Henderson]

Thanks all for your help. I'm doing a budget for 12 months. Some items are
harder to breakdown over 12 months like buying clothes - I know I'm going
to buy clothes in the next 12 months but don't know which month - how can I
put these items in budget?

On Mon, Dec 15, 2014 at 9:33 AM, R. Victor Klassen <rvklassen at gmail.com>
wrote:
>
> I would offer a contrary view.  If your budget is smooth and even, then
> annual is fine.  It’s when things are lumpy that monthly makes the most
> sense.  Then you can put the evenly distributed amounts on all months, but
> the once-or-twice-a-year things in the months when they happen.  Such a
> budget allows you to predict whether there will be cash flow issues, and
> also makes it easier to look forward when you have a larger-than-expected
> balance, to the month to come when the larger expense will eat that balance
> up.
>
> On Dec 14, 2014, at 4:57 PM, Mike or Penny Novack <
> stepbystepfarm at mtdata.com> wrote:
>
> > 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
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