A budget accounts for all the money you plan to earn and spend each month, but it doesn’t typically track the timing of your payments.
As a result, even if you make enough income to cover all your expenses by the end of a month, you could still have cash flow shortages on certain days.
Budgeting calendars work to solve that problem. Here’s a closer look at how they work and why financial experts recommend them.
What Is a Budgeting Calendar?
A budgeting calendar combines your budget with a calendar so you can see exactly when money comes and goes during a specific period, often a month.
For example, if you expect to get paid $3,500 on the 1st and the 15th of the upcoming month, you’d add both payments to your calendar on their respective dates.
Additionally, you’d write in all your regular expenses on their due dates — such as $1,500 to your mortgage lender on the 5th and $125 to your internet service provider on the 10th.
Once you’re done, all your regular cash flow activities will be visible at a glance.
[How to Be Master of Your Cash Flow]
What Are the Benefits of a Budgeting Calendar?
A budgeting calendar provides more organization and visibility around your finances.
“By laying out your bills, payments and income on a calendar, you can anticipate potential shortfalls and make adjustments before you’re caught off guard,” David Tuyo, the CEO and president of University Credit Union, said in an email.
For example, if your bills are concentrated in the first half of the month, you may need to save up income from the previous month to cover them all. Another option is to contact your service providers and try to change some of your bill due dates to the second half of the month.
“For many Americans who live paycheck to paycheck, knowing when your various bills are due is very important if you want to avoid late payments and penalties,” Jim Wang, a Maryland-based investor who founded Best Wallet Hacks, said in an email.
[Tips to Avoid Living Paycheck to Paycheck]
Beyond making ends meet, experts also say a budgeting calendar can help you save more money.
“Whether you’re saving for a vacation or paying off a recent loan, seeing your income and expenses in a calendar can show you exactly how much money you have left each month to move toward those goals,” Wenyao Hu, chartered financial analyst and assistant professor of the School of Management at New York Institute of Technology, said in an email.
Tuyo adds that by marking when you want to set aside money for savings or investments, you’re more likely to follow through because it’s scheduled and accounted for.
“It essentially creates a routine, making budgeting more automatic,” Tuyo said.
[Read: How to Make a Budget — and Stick to It.]
How Do You Create a Budgeting Calendar?
To create a budgeting calendar, start by deciding where you want to house it. You can opt for a physical or digital calendar, like Monarch Money, whichever you prefer.
From there, select a tracking period and collect the following information:
— Regular income: This is an itemized list of all the income you’ll earn during the given period, such as paychecks or invoices. Include the source of the money, amount and pay date for each payment.
— Regular expenses: This is an itemized list of all your normal expenses during the given period, such as rent and utilities. Include the type, amount and due date for each expense.
— Irregular income: This is an itemized list of irregular income during the given period, such as a tax refund. Include the type, amount and due date for each payment.
— Irregular expenses: This is an itemized list of irregular expenses during the given period, such as vehicle registrations. Include the type, amount and due date for each expense.
Once you have all of the above information, add each item to your budgeting calendar in the square that corresponds with its due date.
From there, Tuyo recommends taking a look at your overall cash flow. “This can help you see if there are tight spots during the month where you might need to be more careful with your spending.”
“You can also use it to plan for savings — decide how much you want to save each month and mark down those dates, treating them like any other expense,” Tuyo said.
Tips for Using a Budgeting Calendar to Reach Financial Goals
As you get into using a budgeting calendar, here are some tips that can help you achieve your financial goals.
— Trim unnecessary expenses: “As you review and record the date of your expenses, it might be a good time to review whether you should have those expenses in the first place. Maybe you’re paying for a cable TV service you never watch or a gym membership you don’t use anymore,” Wang said.
— Set specific targets for your goals: “You need to clearly define your goals, whether it’s saving for a vacation, paying off debt or building an emergency fund. Specific targets in mind will help you allocate your funds strategically each month,” Tuyo said. Then, you can schedule the allocations into your budget calendar and track your progress.
— Color code your calendar: “Visualizing your progress can also be beneficial. Use different colors or symbols on your calendar to represent various objectives. For example, you can mark savings contributions in green and debt payments in red. This can make it easier to see how your spending and saving aligns with your financial targets,” Tuyo said.
Last, be sure to celebrate the small wins along the way.
“When you achieve a milestone, such as saving a certain amount or reducing debt by a specific percentage, acknowledge that success,” Tuyo said. That positive momentum will help you stay motivated and on track to achieving your goals.
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How a Budgeting Calendar Can Help You Reach Your Financial Goals originally appeared on usnews.com
Update 10/21/24: This story was published at an earlier date and has been updated with new information.
