Estimates, Adjustments, Commitments, Actualities, and Records

Budget amounts almost never remain unchanged from the time they first appear till the time they last appear as a locked-in number-- often not finalized until a new calendar year is weeks or even months underway.

They begin as budgeted estimates for a new budget year, whether estimated income, estimated expenses, or estimated charges.  By their very nature they are based on the future, all of them.  But they are also based on the best knowledge available at the time they are created,  For example, if a car loan payable monthly is due to be paid off in September, the user wouldn't need to schedule its paynent estimates on through December.  Cars, furniture, and other big ticket items with monthly payments as well as home mortgage loans provide the user with the most accurate estimates of future costs.

Estimates of income likewise are based on current knowledge  as well as past experience averages.  Takehome net paychecks. for example, can be estimated into a new year budget as a continuing expectation if the user expects to continue in the same job with the same benefits and deductions.  If, however, he knows of impending raises, promotion, or other basis for adjustment, new year estimates need to be refined taking these into account.

Another important consideration in setting up a new year budget is the dates users need to schedule payments and can expect to receive regularly-scheduled paychecks.  Some months, for example, have five Fridays where most have only four, so Friday paychecks will need adjustment for the extra, third paycheck in those months.  It is easy to appreciate that any new year budget needs to be set up with a good annual calendar in one hand, such as those found on the back of checking account registers.

Credit card payments, like mortgage payments, need to be scheduled each month on the last day certain to be received and credited before incurring added interest charges--usually at least 3-5 days before the due date if paid by bank online payment. even sooner if paid by mail.  A week in advance is usually a safe bet.

Another considation in setting up estimates is rounding amounts.  Since the user is dealing with numbers which are almost certain to change significantly in any case, it is helpful to avoid penny accuracy and go with large, whole numbers that are expected to be close to reality, then refine them as actual numbers begin to replace estimates over a few months' time.

Thus, if the power bill average average monthly paymemt in 2013 is $273.46, use $275 or better yet, $280 for the estimate setting it up in 2014,  The rounding will help it stand out to the eye as an estimated amount when you're scheduling it to be paid on such and such a date, and help to locate it across the cashflow/budget sides until it becomes an exact, to-the-penny known amount.

At that point the amount is no longer an estimate.  But it isn't yet a realized, paid sum yet either.  It is now an adjustment, and because it is still scheduled to happen in a future time, is still subject to revision.  Until it is actually paid or earned, it can't be classified as a commitment.

So when does a particular budgeted amount become an actual, unchangeable figure?  Pagemonth Home Budgets are designed to treat a number differently through its evolution by the use of decimal position, location, and checkmarks, (forward slashes /)

A number doesn't get exact penny treatment till it becomes an adjustment or commitment.  And it doesn't get a checkmark to its right until it becomes an actuality--in other words, writing the check or  scheduling it for online payment is one thing.  Mailing the check or confirming that an amount has been made by the bank elevates the number to a commitment.  But only confirming that the amount has been received and cashed by the recipient rates a checkmark! 

All that may seem needless quibbling over straws, but trust me, it is not.  Until any amount, whether income, expense, or charge, passes the test of being confirmed by the bank at each phase (and reconciled by the user's statement records even beyond that!), any checkmark is premature.

When we get our finalized charge statement either online or by mail, we can check off everything on it to the right of entries,  And in doing so we can visually spot items that still remain to be paid on the next one, or found by backtracking on a previous one.

And when we receive our finalized checking account statement either online or by mail, we can check off each item on it to the right of entries, and again, easily spot discrepancies if any have occurred.  The checked entry says the amount is now a record of actual experience, and says it not only to the computer screen workspace and spreadsheet file for the year, but also to the printed month pages and end-of-year summary page that follows them sometime by the end of January the following year.

At that point I print and bind my final hard copy of the previous year, ready for reference as I study previous experience and set up my next year's budget amounts, prepare for birthdays and holidays, taxes, vacations and trips to come.

Done in this way from rough estimate to bound record, your Pagemonth Home Budget will serve you well throughout each year.