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)

or

2. Monthly (Spending Goal)

Thanks in advance, I know that you awesome people will have the correct answer for me :)

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  • 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.

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  • 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.

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    • I'm happy to do the drawdown computations for you if you provide a year's worth of past outflows and what you currently have saved.

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      • Khazaril
      • Designer of Chaos
      • Khazaril
      • 1 yr ago
      • Reported - view

      dakinemaui I very recently joined YNAB and it's a new apartment, so I only have two bills to work from. There will be quite a seasonal shift as the weather here in Taiwan demands the use of air conditioning for 8 months of the year. I don't mind budgeting a bit too much, I can always shift it to other places when the bill arrives.

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    • Sky Blue Dragon said:
      I can always shift it to other places when the bill arrives.

      Don't forget the idea is to build up a surplus in the category so it's available in the high months. Make sure the budget entry (after moving anything out) is at least (your estimate of) the monthly average.

      Since you don't have much billing history, a simple approach is to do the drawdown using your old bills under the assumption the new (hopefully more efficient) place won't be more expensive than the old was. Or even scale the old bills based on the two new ones you have.

      Some of my seasonal bills have a 10x swing from winter to summer. If I were starting out right now, I'd want to spread reasonable estimates across as many months as possible. It's all a balance: not too little but not too much either.

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    • All that said, when starting out, there may be higher priorities than accumulating money to avoid scrambling for money in the summer. You might be scrambling right now, so let your priorities gauge where money has to go.

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  • Nick True has a new video on YouTube on how to differentiate between Saving & Spending goals. It's very helpful.   

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