Bi monthly electricity bill, which goal type?
Hi, I have a variable electricity bill that is payable every other month.
I have made a recurring transaction in my checking account that covers this with an estimate, but as this would come under "True Expenses", I should budget half the amount every month. That's correct, isn't it?
The bill varies but it's around NT$3600. So I know that I should set aside NT$1800 per month. The question is, which goal type should I choose?
1. Monthly Contribution (Saving Goal)
2. Monthly (Spending Goal)
Thanks in advance, I know that you awesome people will have the correct answer for me :)
Monthly contribution that should be 1/2 the highest possible bill for the first 12 months (to be sure you don’t accidentally underbudget), and then 1/2 the average.
Continue to couple this with a recurring transaction for the actual bill, which you will update each time you know how much the next bill will be.
A slightly less aggressive approach is to budget the greater of the average or 1/2 the next bill amount.
If you know bills are rising, feel free to budget more. However 1/12 of the highest bill will likely substantially over-save (leaving less for other categories).
Looking at past records is the best way to gauge this first phase of budget entries, but does take some effort. The idea is to make the maximum draw down $0. Nominal contributions (= yearly total / 12) start after that.