Link of the week: Budget annually vs. monthly?

Related to my post about building DIY escrow accounts for your non-monthly expenses, here’s an interesting post from Get Rich Slowly opining that planning your budget by year tends to be more accurate than month-to-month.

It’s an idea, and I don’t think you should look just one month ahead. I tend to budget anywhere from 1.5 to 3 months out in my “future checkbook” ledger spreadsheet, and I have a debt spreadsheet that includes automatic calculations of how long it will take to pay off each debt if I made only the minimum payment each month.

I have other planning sessions with myself (and sometimes my family, if I can wrangle them into it) that take the longer-term picture into account. I also know how much money we need to come up with every month for the next three years if we’re going to be ready to put a down payment on a house.

But for some reason I feel superstitious about planning an exact budget for a whole year out. Maybe it’s because employment always seems like something of a crap shoot, as does avoidance of major unpredictable expenses such as a big health issue or natural disaster.

But one attendee of the inaugural League meeting had an impressive spreadsheet that budgeted I believe it was 6 months at a time, and he’d been successful using that.

What do you think? Is there value in planning a yearly budget? Have you ever tried something like that?

annual planning

Image courtesy of Stuart Miles /

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