Budget is a word that is used in many different contexts. In Budget Forward we have an overall Plan which can contain multiple budgets. A Budget is a high level way to group your expenses or income into broad categories. The total amounts for these budgets, when simulated over your Budget Period form your budget rings.
An example list of budgets might look like the follow:
- Income For items that make up recurring income. Examples: wages, yearly bonus, rental income.
- Living For items that are required for everyday living such as rent, phone, internet or insurance.
- Lifestyle For items that improve your quality of living like streaming services, gym memberships and app subscriptions
- Spending Recurring allowances used for day-to-day spending such as groceries, take-way, date nights and entertainment.
Budget Rings
There are two rings represented. The outer green ring represents all budgets which have a positive value. In other words, any budget that provides income. The inner blue ring represents your expenses. This means a gap in your expenses ring is a positve sign that your income outweigh your expenses. A gap in the green outer ring indicates you are budgeting more expenses than income.
An advanced use case for budgets is creating a budget that contain both income and expenses. This can be done in cases where the expense is unavoidably tied to the income, such as a yearly train ticket for work travel, or childcare. This allows you to easily see the total disposable income in your budget.