Tuesday, March 12, 2013

Greetings Thrifty Friends,

I am a big fan of budgeting. I budget monthly, by paycheck and even by the week. In fact, I thought my propensity to micro-budget helped me save money and plan for expenses. As it turns out I might be doing it the wrong way.

Please scroll down for more.

Keep pinchin' those pennies,
Penny

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TODAY'S THRIFTY TIP:

Research suggests that creating an annual budget instead of a monthly one works best, largely because we feel less confident in our annual estimates, so we tend to add more cushioning for unexpected expenses. In one study, college students underestimated their monthly expenses by 40 percent while overestimating their annual expenses by 3 percent.

While interesting, I certainly don't think that abandoning a monthly budget for a yearly one is a good idea (because most of us don't get paid yearly). The best bet is probably to create a yearly budget to estimate expenses and set goals, and then a monthly budget as we progress through the year.