I’m well-established in my budget, but about once a month, I have transactions happening in the present that apply to the future. For example, my daughter has a summer camp in June that requires full payment now in January. This is also a birthday gift for her, but it distorts my January numbers since I normally budget for that in June. I have other quarterly payments like religious school tuition and utilities, which complicate things even more. How do you all handle these types of transactions in your budgeting?
u/MehX73: This is what I have sinking funds for. I have separate accounts for gift giving, school, etc. I take money from my regular budget each pay period and transfer it to sinking fund accounts. This keeps my regular budget on track and I pull actual payments from the sinking fund when they come due.
u/WrapTimely: Thanks for the vocabulary on what to look up! I’m reading up on the sinking fund concept now. It seems similar to an emergency fund that I shouldn’t feel bad about dipping into. I will look into this further!
u/1979-Corbsy: Yes, exactly—you shouldn’t feel bad dipping into it but that’s hard! I like watching the number grow and try not to dip into it if I don’t have to.
u/DTLow: I also budget with sinking funds; however, I indicate the funding is from savings in my transaction tracking.
u/More_Armadillo_1607: I start with an annual budget, ensuring to tie that to my expenses first, then spread it by month. I make sure the cash flow works, for example.
u/DTLow: Generally, I record with the date of the payment. This makes it easier to match my bank statement. For monthly expenses paid quarterly/annually, my expense tracking supports amortization over the months.
u/budgetocity: We have an extensive planner that allows putting in these types of events; we alert you when they will affect your budget and ensure they get included.
u/labo-is-mast: Treat future expenses as current transactions but mark them as future in notes. For quarterly bills, divide the total by three and set that aside each month. Change the date on the birthday gift to June to keep the budget on track.
u/startdoingwell: One thing that works well with our clients is creating specific budget categories for miscellaneous, fixed or variable expenses. This way, you can log the transaction but still see it tied to its purpose or timing.