Hope for your financial life and beyond

This One Trick Started Our Process of Doing Successful Budgets

successful budgetsThe first attempt we made at budgeting years ago was a nightmare. Our intentions were good and what we did seemed logical at the time. However, after a few short months it became apparent we could not put together successful budgets.

For those first budgets, we calculated what we wanted to spend per category for the entire year. These numbers were based on our income and what we knew (or thought) our expenditures would be. The next step was to divide by twelve to get the budget number for each month.

Seems easy enough, right?

Well, there was one big problem that showed up rather quickly that forced us to conclude this type of process was not going to work.

Every Month Is Not The Same

Do your monthly expenditures always stay the same? Of course they don’t. You may have some expenses that are a set amount each month, like the cable bill or the mortgage. However, most discretionary spending adjusts in amount depending on what is happening that month.

That is the problem we ran into based on our system of dividing the yearly amount by twelve. Months would come where we were being forced to spend (or choosing to spend) more than our allocated calculation for that month.

For example, what happens if you want to take a week long road trip for summer vacation? According to our yearly-divide-by-12 budget, $150 would be budgeted in gas money for the month of July. That’s simply not feasible. We are going to blow way past that amount doing a week of driving for vacation. So how is one going to pay for that vacation trip?

The thing is, a different expenditure would come EVERY MONTH that wrecked a particular category. Life has a way of bringing expenses when we least expect it. We could not make the regular expenses work out, let alone deal with emergencies when they popped up.

Talk about frustrating. It really left us at a loss.

Until we found this cure.

A Successful Budgets Trick: Make a New One Every Month

A revelation occurred when we began to explore the literature on how to make an effective budget. Since expenditures are different every month, the best way to compensate for that is to make a brand new budget – each month. We focused less on the yearly numbers and dealt on what would be coming up for the next month.

So during the last week of each month, my wife and I would sit down and have a budget committee meeting. We’d review what might be happening in the upcoming month that might change our expenses. Then, we would make adjustments to the categories, moving money around to where it would be needed most.

This process happened every month. At first, the meetings were longer as we learned the process and talked through our spending wants and needs.

As time passed and a historical record of budgets began to build, we spent less and less time trying to figure out what expenses might be coming up in the next month. Patterns emerged in our spending and we saw how certain expenses came at the same time every year. After years of building our budgets in this way, we take less than 10 minutes now preparing the next monthly budget.

This method of budgeting, coupled with the building of an emergency savings fund, started to produce successful budgets every month.  I’d highly recommend giving it a six-month trial run to see how it will improve your budget planning. If you need help setting up the process or developing a budget form, you can contact me here.

Questions: Do you have trouble making successful budgets? How do you prepare a budget? How long does it take? What’s been your biggest frustration with setting up a budget? How have budgets worked/not worked for you?

Image at FreeDigitalPhotos.net/Miles

Next Post: Beware: All That Glitters Is Not Gold

Prior Post: Our Local Target Is Showing How to Rock Customer Service

I hope you enjoyed that post. Want more?
Sign up to receive my blog posts via email and get your free gift...
99 Ways to Spend Less and Save More

Privacy Guarantee: I will not share your email with anyone.


  1. This makes a lot of sense. I think I may just start creating a completely new budget every month. For me, this would work well, because I love budgeting and tracking finances. For those who don’t like it, this may be a bit overwhelming though. Thanks for this! I loved the article!


    This was my lightbulb moment too. Except we budget weekly, so we adjusted it every week instead.

  3. Victoria @ Frugaltrial says

    I would seriously struggle to budget yearly. Like you said each month is different and my expenditure varies. I budget per pay packet which for me is monthly, that is so much easier. I also tend to revise my budget as the month goes a long, sometimes I over estimate/under estimate for certain categories.

    • “…revise my budget as the month goes a long…” That’s a good point Victoria! I am peeking at mine probably mid-month just to make sure we are on track. There is nothing wrong with making adjustments mid-stream. Budgets should definitely be flexible like that.

  4. I do think it’s important to revise your budget based on that month’s needs. There are definitely routine one-time expenses that crop up at certain times and it’s the best way to prepare for that. I find myself adding or subtracting categories based on what’s going on during the month.

    • “…adding or subtracting categories…” That’s a great way to go EM. The money has to come from somewhere. If you add to one category you have to take it from another. That’s Budgeting 101…but many people don’t get that.

  5. It looks like you and Kim found a great system that works for you. We do something somewhat similar. We look forward to what activities and additional expenses we expect in the upcoming month to make adjustments as needed. But we also separate some of our bigger planned expenses, like vacations or entertainment. If we have guests over and know we’ll be entertaining, we allocate some additional dollars from our overall entertainment fund, rather than shift monthly discretionary income.

    • We have a lot of categories in our budget (like entertainment) that are completely flexible depending on what is happening that month. Mostly our bills are the ones that are set in stone. We save for our vacations year round so when we go on one, it’s not really factored into that monthly budget. We are just using the money we’ve already saved.

  6. We definitely do not live in 12 equal months of expenses, so I can see where this is a great method. It also gives you the discipline of sitting down every month and reviewing your finances. My hubby and I mostly work on a goals based/% based budget since I started my own company, but I like the idea of the regular monthly check-ins.

    • The regular monthly check ins keep me focused. I review what happened last month and make adjustments for the upcoming month. Helps to make sure nothing gets out of whack.

  7. I don’t do a brand spanking new budget but I do revise categories based on needs for that month. Otherwise it’s too rigid.

    • I don’t like rigidity. There has to be some room for movement in the budget that allows for wants/needs that come up. I’ve never felt completely constrained by our budgets, like we couldn’t adjust them.

  8. John S @ Frugal Rules says

    We do something similar, though we need to be pretty flexible with the fluctuating income. We look at what we have coming in for the month and go from there with certain minimums in place. One thing we do a little differently though, in the road trip example per se, we would just pull the gas money for that road trip out of our vacation fund. I sort of view it as we wouldn’t be spending that money on gas if we weren’t going on vacation so why dock the gas portion of the budget for that?

    • “…we would just pull the gas money for that road trip out of our vacation fund.” Once we figured out how to budget properly, that’s what we ended up doing as well.

  9. Natalie @ Financegirl says

    I hear ya on this one! I use the basic template for every month, but before the month starts, I adjust each category according to the actual month’s projections. I agree it makes is so much easier!

  10. AvgJoeMoney says

    Sweet post. We spend a lot of time on the communication aspect of budgeting – about half an hour a week on Sunday we have a “family budget meeting.” That’s the best part of our budget because everyone is on the same page with spending priorities for the upcoming week.

    • The more communication the better. I think that’s where many couples get into trouble…when they don’t talk about what they value and where they think the money should go.

  11. Holly Johnson says

    We create a new zero-sum budget every month. They always have the same base expenses, but things do vary from month to month. It also works great for us.

  12. Glen @ Monster Piggy Bank says

    We work on a month by month basis and it works well for us, although I think that we will need to be a bit tighter with our budget leading up into Christmas.

  13. Laurie @thefrugalfarmer says

    We prepare a different budget each month too, Brian, and it helps SO much. Like you said, every month is different, at least for most people. When we were trying to have the same budget each month, we’d always feel as if we failed because we went over – somewhere – every month.


  1. […] months will not totally add up. In Brian Forman’s blog Luke1428.com (recommendable, by the way) I read about another approach where you adjust your budget monthly according to what expenses will be present in the coming month. I like the idea and certainly try […]

Speak Your Mind