Author Topic: Budget Categories to 0?  (Read 859 times)

Offline John

Budget Categories to 0?
« on: December 20, 2016, 07:19:55 PM »
So we know the rule to budget our available income to $0.

But I'm curious if people also budget their categories this way too?

For instance, should I budget my eating out category to just cover expenses for the month (so at the end of the month my category is $0) or do people budget a certain amount each month and let the remaining amount roll over to the next month? Or a combination of the two?

I find budgeting a specific amount each month helps "roll with the punches" when you go over a bit in a category, and building up those balances looks great too, but if each of my individual categories is turned into a rainy day fund is there a need for any individualized savings categories?

Trying to find out if I should just budget my categories to $0, and roll all surplus funds into a single RDF to be used for WAMing purposes or continue with they way I do it now. It seems to me just a personal preference to which envelope you want your excess funds to sit in.

Thanks

Offline Joel

Re: Budget Categories to 0?
« Reply #1 on: December 20, 2016, 08:21:37 PM »
I have certain categories that I clean out at the end of every month so that there is a $0 balance. While I have other categories that I keep accumulating in. It depends on the category's purpose...
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Offline Bruce

Re: Budget Categories to 0?
« Reply #2 on: December 20, 2016, 10:11:18 PM »
I have certain categories that I clean out at the end of every month so that there is a $0 balance. While I have other categories that I keep accumulating in. It depends on the category's purpose...

Same here. It totally depends on the category.

My electric bill category for instance always has a balance at the end of winter months as I don't use that much electricity to heat my house. Those balances build up month after month until summer hits. Then in the Hotlanta summers I need those built up balances to pay those dreadful electric bills after trying to cool the house down.

Groceries on the other hand are usually within $50-75 of what I budget monthly so if I have a leftover balance there I $0 it out.

Not so with eating out though. Since I don't eat out too terribly much I don't budget too much for it. However there are those times where I do find myself eating out a lot in a month so I like having "extra" money in that category. The extra money comes from previous month's balances that I left in there knowing I'd have a month at some point where I needed it.

Offline Mike

Re: Budget Categories to 0?
« Reply #3 on: December 20, 2016, 10:22:00 PM »
It seems to me just a personal preference to which envelope you want your excess funds to sit in.

This is true.

I will typically zero out utility categories like electricity and water. The excess goes into the miscellaneous category. The miscellaneous category is then used to cover overspending in other categories. If the miscellaneous category grows too large, I will usually find something to spend it on. If I fail to find something to buy, then the money is moved to the unexpected expenses category.

I will let the remaining balance roll over to the next month in categories like groceries and restaurants. In the following month I will budget a little less in the roll over categories.

I really don't know why I roll over some categories but not others. It appears to be an odd habit that I developed.

Like you said, it's personal preference.
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Offline Billy_McSkintos

Re: Budget Categories to 0?
« Reply #4 on: December 21, 2016, 09:16:28 AM »
Most of the time I let extra money ride. At the end of the year I'll clean many of them out.

For overspending, it depends on the category. Some I will roll over to next month some will get paid that month but I rarely zero the budget amount, just turn the arrow. Like @Mike its an odd habit.
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Offline Alex

Re: Budget Categories to 0?
« Reply #5 on: December 21, 2016, 12:08:33 PM »
Interesting idea.

What I usually do some that I budget to zero (rent) because it's so predictable.

Others, like groceries, I try to always keep at a padded amount. Usually $100. So if I'm under or over I don't have to adjust my budget plans but I do have room to feather the amount that I budget in future months.

And rainy day funds I just keep pushing them upwards. :)
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Offline John

Re: Budget Categories to 0?
« Reply #6 on: December 22, 2016, 07:55:51 AM »
Thanks everyone for the feedback.

I'll continue to fund categories according to my previous methods. Variables categories will let the money "roll over" to account for the variability. Other more static categories will continue to be funded to $0.

To follow up on my original question...how do people handle their RDFs/Savings? Do you have a single account you disperse from as needed (regardless of the reason) or do you set up specific categories?

I can see the appeal of both methods, a single account means a cleaner budget, where as multiple account can provide the granularity of what you're saving for.

Thanks


Offline Mike

Re: Budget Categories to 0?
« Reply #7 on: December 22, 2016, 09:55:36 AM »
To follow up on my original question...how do people handle their RDFs/Savings? Do you have a single account you disperse from as needed (regardless of the reason) or do you set up specific categories?

I have two rainy day funds.
One is "Unexpected Expenses" and is on-budget. This is used for something like an expensive home repair.
The other is "Emergency Fund" and is off-budget. This is a larger fund that is only used for something like a job loss.
In the Cascade Mountains of Oregon