Tuesday, June 23, 2020

What Is Incredibly Cool Budgeting?

A budget is an estimation of income, bills and savings over a specific future period of time. Budgets are usually compiled and re-evaluated on a periodic basis. Personal budgets can be based on paychecks, each month or, with the advent of Income Companion, the next 12 months.


Your continuously updated Incredibly Cool budget on the Look Ahead page


Paycheck and monthly budgeting differ only in the length of the period covered by each budget.

Paycheck Budgeting

To prepare a paycheck budget, you use paper, budgeting forms, an online service, or an app. There is no standard tool for paycheck budgeting.

You prepare a new budget before receiving each paycheck.
  1. Write down the expected amount of the paycheck
  2. Write down your expenses from this paycheck until you receive the following paycheck
  3. Write down your seasonal expenses from this paycheck until you receive the following paycheck
  4. Allot the amount left over after expenses to budgeting categories (give every dollar a job)
  5. Adjust expenses and budgeted categories so that income minus expenses equals zero
Starting on payday, keep track your of spending until the day before you receive your next paycheck.
  1. Record every penny spent
  2. Compare spending with budget categories to ensure the budget is being followed
Monthly Budgeting

To prepare a monthly budget, you use paper, budgeting forms, an online service, or an app. There is no standard tool for monthly budgeting.

You prepare a new budget before the beginning of each month.
  1. Write down the total amount of income you expect to receive during the month
  2. Write down your expenses for the coming month
  3. Write down your seasonal expenses for the coming month
  4. Allot the amount left over after expenses to budgeting categories (give every dollar a job)
  5. Adjust expenses and budgeted categories so that income minus expenses equals zero
Starting on the first of the month, keep track your of spending throughout the entire month.
  1. Record every penny spent
  2. Compare spending with budget categories to ensure the budget is being followed
12 Month Budgeting

Budgeting for 12 months is very different from both paycheck and monthly budgeting. Instead of preparing a new budget before each paycheck or month, with 12 month budgeting you collect all of your day-to-day financial information in Income Companion to initialize the program. After that, the program continuously updates your 12 month budget for you. Your part is to keep up with changes and pay bills twice a month.

Getting Started
  • Download and install Income Companion (free)
  • Do the initial, one time setup
    • Describe when you get paid
    • Set up the amount and weekday for your weekly allowance
    • Add your bills
    • Describe how your credit cards work
  • Pay bills the first time
    • Initialize the balance in your checking account
    • Add all credit card activity since the last statement
    • Pay bills
Spend 4-5 hours per month using the program
  • Add short and long term saving plans plus needed sinking funds
  • Use built-in calculators to create custom payoff plans for debt
    • Payoff plan for one debt
    • Snowball plan for two or more debts
    • Amortization plan for high balance credit cards
  • Keep your information current such as
    • Entering deposits into your checking account
    • Entering changes to income
    • Entering changes to bills
    • Entering and scheduling payments for credit card charges
    • Balancing checking account statements
    • Reconciling credit card statements
  • Pay bills twice a month
  • Get your weekly allowance
  • Monitor your 12 month budget
  • Play "what if?" with anything to help you make good money choices
Summary

Both paycheck and monthly budgeting focus on deciding how you will spend the money you have left over after paying your bills. This amounts to micro management of your left over cash. Doing any long term planning or playing "what if?" before making a financial decision is not supported. You have to find other ways of managing your future money. You are also on your own when balancing your checking account statements and reconciling credit card statements.

When you use Income Companion, all of your household finances are managed in one place. Everything you need to do to keep up with your everyday money is included in the program. A common belief is that with budgeting there is no one solution that fits all. That is no longer true. Income Companion works for everybody. The program's flexibility lets you manage your finances your way using a standard, teachable tool.

That's why using Income Companion is doing Incredibly Cool Budgeting.


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