[moneydance] Budgeting from scratch

[Bradley]

Well, you're on the right track, anyway. The only problem is that your
budget would be reactive instead of proactive. That is to say that your
budget would be based upon common expenses but not the uncommon ones.

The method you proposed is actually how you build an initial budget
template but then, after that, you have to expand it to include
irregular and foreseen upcoming expenses such as annual / semiannual
bills, saving for auto replacement or vacations, and so on. No one can
possibly make an all-inclusive budget but the more fore planning you do
in your budget, the more successful it will be.

One other thing to consider doing is making your budget based upon a
worse case scenario (unplanned medical expenses, for example) and then
take the money you didn't spend each month and roll it over into a
retirement account or for a future anticipated vacation or expense.

Bradley

Ben Woodard wrote:
> I've been trying to wrap my head around how to make use of the features of
> MoneyDance to solve the problem that I have. Can someone who has more
> experience with this process or more experience with budgeting in general
> make sure that I understand this correctly. I'm trying to build up a budget
> from scratch -- like no information. Here is the way that I think it should
> work
>
>
>    1. Update the list of categories until they reasonably reflect your life.
>    It seems to me that if something has 0 budget, then it shouldn't have a
>    category.
>    2. Go into budget manager and fill in the fixed expenses based upon what
>    you know.
>    3. Enter in your salary and income into the budget manager
>    4. Add reasonable budgets to all the categories that you haven't filled
>    in based upon priorities. Iterate through this budget until expenses=income.
>    This is just a first cut on your budget.
>    5. When you have enough actual data to compare against the budget, like
>    at least a months worth, create a copy of the budget and make adjustments
>    based upon the new values. Iterate through this until you seem to get a
>    budget plan that works and reflects your values.
>    6. If during the course of the year, you want something new or their is a
>    change in life or costs or you need to prioritize, copy the budget and
>    fiddle with the values in the new "test budget" until you get income to
>    equal expenses. This allows you to create what-if scenarios.
>
> Does that sound right?
>
>
> -ben
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