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What time of year do you budget/plan?
Old 05-11-2020, 12:12 PM   #1
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What time of year do you budget/plan?

We do ours in about April each year. Makes sense to wait for the tax return to be completed. I have two LLCs, so we go out for a nice dinner and have an hour-long discussion about the businesses while we go through the numbers...I write up minutes and we call it a "Board" meeting.

At the same time we compare our actual spending from prior year to our budget, and make any changes we need to. Just did this for last year and we're seeing a trend...we have an "unusual" expense of $5,000-$8,000 every year for the past 4 years...so we decided to add a line item for these "unplanned expense" items going forward. We have the room in the budget, so it's fine...just nice to know it's not "unplanned" anymore. One year it was my office renovation, one year it was a new engine in my show car, one year it was a combination of new skylights and re-stain our privacy fence.

So what time of year do you do your planning? Or do you do it more frequently like monthly or quarterly? We set ours up annually, then I do a "back of the envelope" calculation quarterly to make sure we have enough liquidity.
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Old 05-11-2020, 12:18 PM   #2
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We do our annual year review January/February in preparation for taxes target to be done by March. We look at expenses from last year, review our portfolio/performance, project spending for current year, decide how to fund spending and any other actions. We also do a mid year review in July.
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Old 05-11-2020, 01:03 PM   #3
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I track my expenses quarterly so that I can decide if I want to make adjustments to under / over spending. I keep 4 years in cash and (in theory) replenish late December / early January. I say "in theory" because so far my dividends and DH's part time income have kept us cash positive each year. 2020 is the first year without DH's income and our first year without employer healthcare (income down, expenses way up) so 2020 will be my first real foray into true rebalancing.
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What time of year do you budget/plan?
Old 05-11-2020, 01:09 PM   #4
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What time of year do you budget/plan?

During the first week in January I withdraw my year's spending money from Vanguard. So, I really hit it hard just before doing that. I don't exactly *budget*, in that I don't set limits for each category of spending. I do figure out how much I can spend from my portfolio for the year and that is what I withdraw around January 1st or 2nd.

Then, throughout the year I add up all my spending for the month, at the end of each month. At that time I double-check to see how I am doing thus far in the year compared with my projections.
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Old 05-11-2020, 01:12 PM   #5
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Our budget is based on the calendar year. I adjust the budget on an ongoing basis, like if our earthquake insurance or air fares to visit family go up.
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Old 05-11-2020, 01:30 PM   #6
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I update Quicken daily, and I update my Excel financial spreadsheet every few days to a week. So I'm always doing a little bit of monitoring. But it certainly isn't necessary and adds really no value other than I find it personally of interest.

On an annual basis, I do income tax planning work in December so I can execute anything that needs to be done on a calendar year basis, like Roth conversions. I then also have a period of time in the spring where I actually do the tax returns for me and for some family members.

I guess I also have a "college cycle" where I pay tuition bills, reimburse myself from the college accounts, etc. That happens in August-ish, January, and possibly in May depending on whether the offspring are taking summer classes or not.
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Old 05-11-2020, 01:34 PM   #7
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We plan and take our IRA w/d's in December. That gives control over our income and amount of taxes for the year. In the past we have bought and sold real estate, DW has hit it big at the casino, and other windfalls have taught us to make adjustments prior to year end. Once January 1st rolls around its too late.
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Old 05-11-2020, 06:17 PM   #8
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January. we look at which charities we will support (rarely drop any, usually add one or more). and we look at our long-term savings (sinking funds) and either increase $, decrease, declare a particular fund to be 100% funded or create a new line item fund.
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Old 05-11-2020, 09:51 PM   #9
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I do my planning in the Oct/Nov timeframe and test/revise the new plan in Dec. It’s then put into action Jan 1.
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Old 05-11-2020, 10:30 PM   #10
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I don't budget at all.
I just track spending, so if something comes up and it seems good/reasonable we do it.

I do summarize our net value at the end of each year, just to track it.

We are natural born frugals, so it takes an effort to spend as much as we "should".
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Old 05-11-2020, 11:59 PM   #11
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I review the expenses for the year at the end of the year and tweak my budget for the next year if necessary.
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Old 05-12-2020, 12:14 AM   #12
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I haven't, I don't and I never will.
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Old 05-12-2020, 04:51 AM   #13
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Nov/Dec, plus I track spending in about 5 buckets monthly.
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Old 05-12-2020, 05:07 AM   #14
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I haven't, I don't and I never will.
Is it necessary then for you to bother to respond to a legitimate question?

OP; We actually budget for the next year near the end of the year and then regularly fine tune that budget during the year, as circumstances change. Budget, for us though is more like a monitoring tool, than a hard and fast budget. As we make changes during the year, we can usually find offsetting decreases for any category that requires an increase.
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Old 05-12-2020, 05:36 AM   #15
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Our very rough budget, which is used really only for determining #years spending in various investments, has very gradually increased based on our travel spending. I may take a look in Jan at our spending for the prior year, but as it usually is less than our withdrawal, it doesn’t matter much. I do review our cash flow situation in Jan, set aside funds for owed and estimated taxes, and decide how much of the remaining cash can go to short term CDs. That’s the limit of my planning. We otherwise don’t carefully budget.

We’ve tracked spending in Quicken for decades, and that goes on almost automatically now, so all the data is there whenever I care to review it.
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Old 05-12-2020, 05:43 AM   #16
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Quote:
Originally Posted by Finance Dave View Post
At the same time we compare our actual spending from prior year to our budget, and make any changes we need to. Just did this for last year and we're seeing a trend...we have an "unusual" expense of $5,000-$8,000 every year for the past 4 years...so we decided to add a line item for these "unplanned expense" items going forward. We have the room in the budget, so it's fine...just nice to know it's not "unplanned" anymore. One year it was my office renovation, one year it was a new engine in my show car, one year it was a combination of new skylights and re-stain our privacy fence. .
We’ve had a “Special Expense” category in Quicken since retiring to collect these unusual expenses plus large electronics purchases, etc. which occur every few years..
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Old 05-12-2020, 06:32 AM   #17
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By "budget," I mean planning out projected cash inflows and outflows from my local bank's checking account to pay the bills and to invest any excess funds elsewhere. I do that in late December, once I have learned what my two biggest monthly bills will be for the upcoming year - my co-op maintenance charge and my health insurance premium.


I adjust this framework throughout the year based on actual expenses, for the purpose of figuring out how much excess money I will have to invest elsewhere. Sometimes, I have to carry forward a monthly surplus so it can pay for some of the lumpier expenses such as income taxes and car insurance. For 2020, I had to postpone this annual task until I could determine what my ACA monthly premium subsidy would be - it had changed twice in January - and it was rather large.
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Old 05-12-2020, 06:56 AM   #18
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At least weekly review balances in all accounts.
Monthly make sure enough cash is in checking to pay bills.
Annually in February or so do taxes and ACA renewal.
We track total spend (for the year) and keep it under 3.5% of portfolio.
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Old 05-12-2020, 07:04 AM   #19
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Most of our planning has to do with taxes and adjusting contributions to the retirement plans near the end of the year. So I think the perfect time to do that is when one has only a few pay checks left to make adjustments, when new tax-prep software comes out, and whether we need to bunch deductions into the current or next tax year. There is lots of visibility about the year's investment dividends and usually a good estimate of the upcoming December distributions, too. Furthermore, you have just submitted your tax return in October (after filing for an extension). So the answer is ...

Thanksgiving Holiday long weekend!
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Old 05-12-2020, 07:24 AM   #20
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As a lean FIRE, I do it almost daily if not constantly. Especially now that spending is getting out of hand trying to buy groceries and inflation is skyrocketing.
There is also a lot of "movement" across the board:
* as interest income drops making headroom for Roth conversions at year end so I have to allocate for that before locking up funds
* inflation starts ripping up my budget
* now expecting future taxes to zoom, so I have to re-look at future tax rates vs. ACA subsidies today.
* life insurance vs. LTCI tradeoff should really be done this month as I have a quarterly insurance bill coming next month.
* etc.
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