A point was raised on how I budget, or rather on my style of budgeting.
Once again, criticism, or rather constructive criticism is always welcomed, and this was certainly in that category.
Their point was that a budget should be set on the minimum expected income. Or rather, on salary alone, and should exclude any commissions or bonuses.
This is a sound and prudent strategy, and one that should be considered and employed when possible.
This is just like the strategy that I do employ (partially) which is to underestimate (slightly) your income and overestimate (slightly) your expenses.
The combination of the two will keep you on budget and account for any slight errors in either or both.
My number that I base my budgets on, my “Budgetary Minimum” is the minimum amount of net income I need in order to make my budgets balance.
This concept and that specific number is a holdover from when I was buried in debt and I literally needed that number or I would be in trouble.
I keep holding to that number because I expect and will do whatever I have to (that is: legal, ethical, and moral) in order to make that number.
This is because I have gone through a great deal to win back my paycheque and so I will use all of it to better myself, my life and my future. I will not slack off simply because I can.
My budgeting style is a bit more of a realistic approach (sorta). I start out with my number, My Budgetary Minimum and keep focussed on making that number.
During my payperiod I update my projected net income for the upcoming paycheque will be. Yes I have a separate spreadsheet for that.
If the end of the payperiod is coming and it looks like I won’t make my Budgetary Minimum then I will usually take a bit out of my vacation pay (Boss lets me do that) in order to still make Budgetary Minimum.
Either that or I will just accept not making Budgetary Minimum and adjust my budget accordingly.
When I make Budgetary Minimum before the end of the payperiod I update my income in my budget accordingly each day.
I also update my expected expenses each day. This is a constant process to keep tweaking my budgets in order to keep on track for my fiscal future.
I base my budgets on what I can realistically expect to make and spend, rather than on a lowered number.
It may not be textbook, but it is what works for me.
As always: Keep your head up, your attitude positive, and keep moving forward!