Hi, I was wondering what is the best budget period for my situation:
I’m paid roughly on the 1st and 15th of every month
I use my credit card for most of my recurring bills and monthly purchases, which I pay in full
My credit card billing cycle starts on the 14th
Are there any implications to starting my budget period on the 1st of each month if my credit card cycle starts on the 14th (which means it doesn’t get paid until approx. the 20th of the next month)?
I’m having trouble understanding the impact (if any) of having a credit card bill that cuts across two budgeting months.
Or should my budget start just match my credit card cycle? Are there any advantages to this?
Thanks!
EDIT:
Thought about this more and my confusion might be because I’m starting a brand new budget.
Essentially, I’ve setup a new budget for 2022 starting January. Budgeting period begins on the 1st.
I have 1 credit card statement that was issued on Jan 15 which covers my expenses from Dec 15, 2021 to January 14, 2022. For this statement, I feel like I should be ignoring any transactions that occurred in Dec and only import the transactions from January - is this correct?
The remainder of my January transactions will be on my next statement which won’t be issued until around Feb 14. By that time, the budget month will have rolled over to Feb.
If I import my entire Feb 15 statement (which will have transactions spanning Jan 15 to Feb 14), how would this affect my budget for January and February?
Also, this statement would include the payment of my last bill (Dec and Jan expenses) - should this payment be partially recorded and only account for Jan expenses?
As you can see I’m really struggling to understand how my credit card billing cycle affects my envelopes/budget
I have a similar situation as you. I have my budget set up as monthly starting on the first of each month. I have monthly envelopes for my monthly expenses such as utilities and mortgage. I have a biannual envelope for my auto insurance which gets paid every 6 months. I also have a number of annual envelopes for bills that are paid annually or randomly throughout the year. This works good for me, but you may find something else works better for you. GB is very flexible, and I’m sure others will also post their answers here.
Chiming in to say that I’m also paid twice a month, have credit card statements that end randomly in the middle of the month, and also budget to the 1st of each month on a Monthly budget.
As for your question about importing / starting: Goodbudget is designed to be used from the present going forwards, so you should be able to use it starting whenever, and without needing to import any transactions or information that existed before you joined. That’s not to say you can’t do that, but if it’s easier not to, there’s no reason to complicate things unnecessarily!
Mostly speaking, you should try to budget how it makes the most sense to you. A lot of Goodbudget users (like myself and Wayne in the previous comment) just budget to the month, rather than budgeting to the paycheck or the credit card statement, because the calendar month is easier to understand and budget with. But if that’s not how you think of your budget, you can totally do it any other which way works for you.
Thanks Alex - so it sounds like I should ignore the credit card statement that ended Jan 15 and just log the transactions that appear on the next statement?
In this case, would my January budget end up with a surplus?
It sounds like since I’m starting a new budget it may take a couple months for my budget to “align” with my spending?
Your budget shouldn’t end up with a surplus because your Account balances will already have the transactions taken into account.
For example, let’s say you start Goodbudget today, February 1, and enter your credit card’s current balance of 100. You don’t need to also add those transactions that added up to that 100 – they won’t appear in Goodbudget because you made them before you started Goodbudget, but they’re still being taken into account and removed from your budget because your credit card shows that 100 balance.
Assuming you enter your account balance(s) into Goodbudget correctly, it should “align” to your budget immediately, even if the transactions that were taken out before you started aren’t actually in Goodbudget. Does that make sense?
In other words, even if your current statement is from January 15 - February 15, if you’re starting today, February 1, you don’t need to enter anything from January 15 - January 31. Because once you put in your credit card’s proper balance, those transactions will be “entered” at the same time, subtracting from the total available balance you can budget with.
Unlike in real-life, where your available balance doesn’t actually decrease until you pay down the credit card bill, in Goodbudget when your credit card balance increases (i.e. you pay for things on the card), your available balance lowers immediately, because even if you haven’t actually paid that money in real-life, it’s money you no longer have.
One thing you said caught my eye—“importing transactions”. If by that you mean that you’re not entering them in real time, then you WILL probably have confusion straddling months. Ideally, each time you spend any money, whether it be cash or on a card, you’ll enter that transaction into Goodbudget. When it’s time to pay the card, you’ll have enough in your account to cover the balance, assuming you didn’t get into the red either in your envelopes or your Unallocated balance.
The only time importing transactions should really be used is when you’re confirming that there are no missed entries, like during reconciliation or if you do a weekly confirmation, for example. Otherwise a quick entry at the time the money is spent will keep you on track, regardless of when the credit card bill comes due.
Hope that helps!
Thanks @Tiffany - that’s a good point re: real time expenditure entries! I’m going to take this approach going forward
@alex I’m still a bit confused… so let’s say I ignore those transactions that happened from Jan 15-31. What happens when I go to pay my bill in February? When I record that transfer into my credit card account on Goodbudget, would it somehow look like I’ve overspent? Or is there some reconciliation that I’m not aware of?
Sorry, maybe my choice of words was wrong. You’re not “ignoring” the transactions so much as choosing not to put them into Goodbudget.
For example, if your credit card balance shows as 100.00 because you have ten transactions of 10.00 that add up to that amount, or if your credit card balance shows as 100.00 because you put in your balance as 100.00 when you started, either way it’ll show 100.00. It’s just that in the second case, you didn’t have to go through the work of adding those 10 transactions.
So either way, whether the transactions are there or not, you won’t be overcompensating because the balance you’re paying for in the end will be the same.
@alex Got it now! I had to go ahead and setup my account balances to understand what you meant, pretty much:
unallocated funds = bank account balances - credit card balance
I also did a mock transfer from my chequing account to my credit card account to see how it would affect my available funds (did not change) - so now I understand what you meant by:
Unlike in real-life, where your available balance doesn’t actually decrease until you pay down the credit card bill, in Goodbudget when your credit card balance increases (i.e. you pay for things on the card), your available balance lowers immediately, because even if you haven’t actually paid that money in real-life, it’s money you no longer have.
I have the exact same issue. I just started using goodbudget. What I’m trying to do is to register everything that I spent from February 15th to March 14th as if those expenses were made in March.
Since I’m already spending on the “April” budget, is there a way I can move periods and register those expenses in April? , or do I just wait until April comes, and register my expenses from March 15th on as if I had made them during April?
I think you’re asking about doing a monthly budget that falls from the 15th of one month to the 14th of the next, yes? If so, you can specify that your budget starts on the 15th instead of the 1st by using the Edit function either on the web or in the iOS app (I’m sorry, I don’t know how it’s handled on Android). On the web, click the Add/Edit button above your envelope totals, and note the box that says “My budget starts on the ____ of the month”. Change the date to the 15th and you’ll be all set.
You can accomplish the same thing in iOS by choosing the Envelopes tab, then Edit, then at the bottom you’ll see a line that says “I Budget Monthly>”. If you click that line, you can choose another budget period, or keep monthly but change the starting date.
I hope that’s what you were asking!
