What is Calendar Budgeting and why it’s the best way to budget

What is Calendar Budgeting?

Calendar budgeting is a budgeting method using a calendar, where the payment dates are organized numerically. By listing your expenses and income by payment/due dates, this method allows you to more accurately know when money comes in and when money goes out. And, if you include a running daily balance, you’ll immediately know how much money is available and if you are going to have a shortfall of funds. Additionally, calendar budgeting can be beneficial for those with irregular income to help you to plan better.

Why is Calendar Budgeting preferred over other methods?

Other budgeting methods, such as the envelope method or zero-based budgeting where you total your income minus expenses don’t provide the same level of detail, flexibility or assurance as calendar budgeting. These methods are missing an important key factor–how much money you’ll have in the bank on a given day. If you budget based on envelopes or by total bills, are you sure that you’ll have enough money to fill the envelope (or pay the bill in full) before the due date? Not all of the time; there’s no certainty. Therefore, envelope and zero-based budgeting aren’t reliable methods to use for budgeting.

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How do you setup a Calendar Budget?

Setting up a calendar budget is super simple. You can literally use a calendar, list all of your bills on the days of the calendar and insert your paychecks. Alternatively, you can take a sheet of paper, number from 1-31 and note your bills and income on the respective days of the month like you would on a calendar. Again, as mentioned above, no matter which method you use for calendar budgeting, either an actual calendar or a sheet of paper, you should keep a running daily account balance on the calendar so that you know how much money you’ll have on any given day of the month. Doing so will give you the confidence that you’ve been lacking when it comes to budgeting your family’s money.

Calendar Budgeting Setup:

Here’s a sample of a completed calendar budget with expenses, income and a running daily balance.

Step 1

Start with a blank calendar. The example below was created in Excel, but you can print a blank one you find online, you can create one in Word or buy a calendar online or pick up on from the store.

Step 2

Next, carve out a section at the top of each day for the ‘Beginning Balance’ and at the bottom of each day for the ‘Ending Balance’. In this example, the beginning and ending balances are shaded in gray

Step 3

Next, enter your current checking account balance. In this example, we are on the 1st day of the month and our checking account balance is currently $1000. If you are creating a calendar budget and today is the 6th of the month, enter the balance on the 6th.

Step 4

Next, enter your bills (denoted in red) and your paychecks (denoted in green) throughout the entire month.

Step 5

Now, let’s get into the fun stuff — finding out how much money you’ll have each day of the month. Start by subtracting expenses from the beginning balance. If you have a paycheck on that day, add the amount of your income to the balance. Put the result in the Ending Balance location at the bottom of the day.

In this example, $1000 – $800 = $200 (ending balance). Keep repeating this step (subtract expenses from the beginning balance, add income to the balance and enter the amount in the ending balance) for the entire month.

When you get to the end of the week, copy the ending balance to the beginning balance of the next week. For example, Saturday’s Ending Balance will be transferred to Sunday’s Beginning Balance.

Here’s an example of a completed calendar budget with expenses, income and a running daily balance.

The Power of Calendar Budgeting

Being able to know how much money you have at any given time within the month is powerful. Does your current budget give you that sense of confidence? Can you see why it’s a superior method to your old ways of budgeting.

What does your completed calendar budget for this month look like? Take some time to analyze what you see…

  • Do you have money left over every day? If not, simply knowing this as early in the month as possible gives you the best chance to modify your spending in advance and overcome challenges more easily.
  • What expenses can be reduced, like grocery bill, fun money, eating out?
  • Do you have money in savings that you can use so you can pay for the shortfall?
  • Can you work overtime, pick up a side job, or sale something to earn additional money to supplement your budget?

Try doing this again, right now, for next month and see what’s in store for your money.

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