These tips were written with Budget Boss for iOS in mind. Budget Boss performs a forward-looking cash-flow analysis to help you plan your budget and predict your future balance.
How can I make my budget work if I take on a new car payment? What if I get that promotion? With Budget Boss, it’s very easy to experiment and play hypotheticals with your budget. You can save multiple budget models in case you want to evaluate different scenarios, and you can generate detailed PDF reports and refer back to them at any time.
Creating your plan is easy. Following it can be a different story - especially at first when your initial plan may have underestimated some expenses.
One of the key benefits to the forward-looking approach of Budget Boss is that it will predict your balance on any future day. Whenever your actual balance strays from the forecast, you can apply a balance adjustment to re-calibrate the prediction from that day forward. Balance adjustments are also tracked in the app. Over time you’ll build up a history of these adjustments which can help identify bad spending habits or reveal expenses that your forget to account for. It may take a few iterations, but eventually your budget model can become a very accurate predictor of your actual cash-flow.
Before creating your budget, it is important to set goals for yourself. Whether it’s to save up for a down-payment or get out of debt by the end of the year, having clearly defined objectives will help you set up your budget and stay motivated following it.
Account for all your fixed expenses first. A large part of your budget likely follows a regular schedule. Things like rent, car payments, or other routine bills usually occur on or near the same day each month. All types of recurring income and expenses are easily modeled in Budget Boss, and you can schedule them for specific days of the week or month to create an accurate representation of your cash-flow.
As you build up your model, you’ll be able to see how each element impacts your bottom line. And once all your fixed income and expenses are accounted for, you’ll better know how much you have left for all the other expenses that are more variable from day to day.
Be careful not to rely too much on your previous spending habits when setting up your budget. Services linked to your bank accounts that track and categorize your expenses can teach you a lot about your spending, but remember that your budget represents what you should be spending, not what you have been spending.