Serving Bread

You may have heard of a fiscal year. Organizations run their budgets on an annual basis where they balance their accounting at the end of the fiscal year and start over when the new year begins. It’s wise for families or individuals to also integrate a fiscal year in their accounting, where once a year you can reset your budget, assess your expenses, and make financial commitments for the next 12 months.

In addition to operating with a fiscal year (I’ve mentioned in a previous post that my family’s fiscal year runs from September 1 to August 31), we also operate with a fiscal month. Basically, at the end of every month, I balance my checking account in a way where we end the month with $0. If we end up with a little extra money at the end of the month, that money either goes into some sort of savings or toward debt. If we end up a little under at the end of the month, then I look to cover that shortfall through our savings.

What I like about having a fiscal month is that it gives me a better sense of how to manage my money and be a steward of the money we have. We can make changes along the way and be on top of our finances.

Some tips to establish and maintain a fiscal month:

• Balance your accounts every month and then initiate accounting exercises after you balance your account.
• The reason I do this at the end of the month is because we get paid once a month. If you get paid every week or twice a month, you may want to have a fiscal week or fiscal bi-week.
• Make sure you know how you want to spend any extra money and/or how you would handle if you ended in the red at the end of the fiscal season.

-----
If you enjoyed this post, be sure to grab the RSS feed. Also, please take a moment to submit this post through "Share This" above.
-----