How to establish a budget for the New Year (Windows)
Creating a budget is one of the most important things that you can do with Quicken. It is vital to your financial success and will help you build a strong foundation for your finances. Managing your finances can be an overwhelming process for many of us, but a budget can help you organize and stay on top of things.
Creating a budget is like making a plan for your money. You set a monthly limit for different categories which represent how you would typically spend your money. As a result, you can always see a breakdown of your spending in individual categories, and whether you’re on track with the overall budget.
To begin working with your budget, go to the Planning tab in Quicken. If you do not already have a budget, Quicken will help you start one.
Planned spending
Another area to anticipate with your budget is planned spending and high-income months. For example, November and December are often higher spending months due to holiday spending. There may also be high-income months for you due to an annual bonus, tax refund, or other periodic income. If you look at your budget using Annual View, you can make adjustments for individual months to account for these changes.
A budget is not something you only set up once and follow without question. The best practice is to review your budget at the beginning of every month to make sure it includes any areas where you expect to spend or receive a different amount of money than in previous months. For example, if you have a planned purchase such as buying a big-ticket item or a vacation, then adjust that month’s budget in advance to allow for that spending.
Adjusting for inflation
In typical years, inflation is low enough that it does not factor into your budget, but 2021 was not a typical year for inflation and calls to the fact that you should be prepared to adjust your budget for inflation. While predicting inflation is difficult, the key is to base your budget on what you expect to have to pay for the same categories at the end of the year, and adjust accordingly. If you currently spend two hundred dollars on groceries per month and you expect to spend 7% more by the end of the year, then you would expect to have to budget $214 at the end of the year. You would then raise your budget for that category slowly through the year, adding a dollar to two to the budget every month.
Incorporating Goals
You can easily set and track financial goals with Quicken. Quicken lets you create a savings goal account, which you can use to dedicate some of your money to a vacation, a major purchase, or anything else you want to set money aside for. This is a special type of asset account. Once you’ve set up your goal, you can incorporate that goal into your budget. To start a goal, select the Savings Goals tab under Planning.
Emergency Fund
Another part of your budget you may want to set up is payment toward an emergency fund. An emergency fund is an amount set aside to deal with unexpected gaps in income or significant unexpected expenses. Emergency funds are not used as a buffer in case you go over budget but are instead set up to keep you going when things go wrong. You can set up an emergency fund in the same way you set up other savings goals.
How to establish a budget for the New Year (Mac)
Creating a budget is one of the most important things that you can do with Quicken. It is vital to your financial success and will help you build a strong foundation for your finances. Managing your finances can be an overwhelming process for many of us, but a budget can help you organize and stay on top of things.
Creating a budget is like making a plan for your money. You set a monthly limit for different categories which represent how you would typically spend your money. As a result, you can always see a breakdown of your spending in individual categories, and whether you’re on track with the overall budget.
To begin working with your budget, go to the Budgets tab in Quicken. If you do not already have a budget, Quicken will help you start one.
Planned spending
Another area to anticipate with your budget is planned spending and high-income months. For example, November and December are often higher spending months due to holiday spending. There may also be high-income months for you due to an annual bonus, tax refund, or other periodic income. If you look at your budget using the 12-Months view, you can make adjustments for individual months to account for these changes.
A budget is not something you only set up once and follow without question. The best practice is to review your budget at the beginning of every month to make sure it includes any areas where you expect to spend or receive a different amount of money than in previous months. For example, if you have a planned purchase such as buying a big-ticket item or a vacation, then adjust that month’s budget in advance to allow for that spending.
Adjusting for inflation
In typical years, inflation is low enough that it does not factor into your budget, but 2021 was not a typical year for inflation and calls to the fact that you should be prepared to adjust your budget for inflation. While predicting inflation is difficult, the key is to base your budget on what you expect to have to pay for the same categories at the end of the year, and adjust accordingly. If you currently spend two hundred dollars on groceries per month and you expect to spend 7% more by the end of the year, then you would expect to have to budget $214 at the end of the year. You would then raise your budget for that category slowly through the year, adding a dollar to two to the budget every month.
Incorporating Goals
You can easily set and track financial goals with Quicken. The best way to save towards a goal is to add that goal to your Categories. You can then add that category to your budget to track the money you set aside to reach that goal.
Emergency Fund
Another part of your budget you may want to set up is payment toward an emergency fund. An emergency fund is an amount set aside to deal with unexpected gaps in income or significant unexpected expenses. Emergency funds are not used as a buffer in case you go over budget but are instead set up to keep you going when things go wrong. You can set up an emergency fund in the same way you set up other savings goals.
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About the Author
John Hewitt
John Hewitt is a Content Strategist for Quicken. He has many years of experience writing about personal finance and payment processing. In his spare time, he writes stories and poetry.
