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Lesson 8. Budgets > Creating a New Budget
Creating a New Budget
There are two ways to get started with creating a budget. The first is to click the Add Budget button shown in Figure 8.1. You can also click the Budgets tab on the Overview page that is shown in Figure 8.2.
Figure 8.2. Select the Budgets tab to start building a budget.
Both methods will take you to the Budgets page shown in Figure 8.3. Notice that the information on this page may still contain irrelevant or incorrect budget values that are initially set by Mint.com. You can change those soon enough.
Figure 8.3. Start creating a budget on the Budgets page.
The first thing you should do is click the Create a Budget button shown in Figure 8.3. Clicking that button immediately opens a new window like the one shown in Figure 8.4.
Figure 8.4. The Set a Budget window allows you to select categories and associated spending limits.
Click the Choose a Category drop-down menu, and you see a long list of categories that can be monitored by the Budgets tool, as shown in Figure 8.5.
Figure 8.5. You can use the Budgets tool to monitor existing categories.
I want to set a budget (to monitor my spending) for books, which is found under the Shopping category, as shown in Figure 8.5. Notice also in Figure 8.5 that you can create custom categories. (You learned how to do this in Lesson 7.) I select Books as my category, as shown in Figure 8.6.
Figure 8.6. Selecting a category provides average spending habits.
The first thing you notice after selecting a category is that Mint.com provides you with a bar graph that shows six months’ worth of spending in that category, along with an average spending value. Figure 8.6 tells me I spent an average of $59 per month (from Dec 2010 to May 2011), and the graph tells me that February was my highest level of spending at close to $100.00.
Tip: Averages Are Just Averages
One high or low-spending month can easily affect the five months that are used to generate the average spending value. Keep this in mind as you try to set a realistic spending threshold for your budget categories. February is fairly typical of my spending habits per month, and January and December are my slowest book buying months as I attempt to recover from holiday spending. $75 or more is much more realistic—I’m a technical writer, so I buy a lot of books for research and self-training—so I’m going to ignore Mint.com’s $59 suggested threshold and bump it up a bit.
Below the Choose a Category drop-down menu, you are asked to select a time period for this category. Your options include Every Month, Every Few Months (useful for quarterly automatic payments, for example), and Once, as shown in Figure 8.7.
Figure 8.7. Select how often to monitor a budget category.
For some spending, you can be reasonably certain that an item will happen only once. For example, homeowners may have a once-a-year charge for membership dues in a homeowner’s association. Or you may budget a flat amount of $500 per year for new tires for your car. Remember, just because you budget something doesn’t mean you have to spend it. By adding your anticipated charges, Mint.com is better able to help you monitor your spending and balances and alert you when spending in one category puts your budgeted amount for other categories at risk.
For my Books category, I select the Every Month option—I’m a book fanatic and I can’t remember the last time I didn’t visit the bookstore at least once in a given week. When it comes to setting a budget, the best advice is to be true to yourself and then be honest with your budget settings. So, knowing that I spend a set amount each month, it’s now time to figure out how much I want to budget for book expenditures.
Figure 8.8 shows that I entered a value of $100.00 for the Amount, and I placed a check in the check box for Make This Budget Roll Over, ensuring that my budget resets at the beginning of each month. This, in turn, gives me a better result in the averaging field later on should I revisit this budget category (more on this shortly).
Figure 8.8. Provide a budget amount and decide if it resets each month.
Last, click the Save button (see Figure 8.8). Now scroll down the page a bit, and you find your new budget category and value added to the list of budget categories, as shown in Figure 8.9.
Figure 8.9. Your new budget category is visible in the category list.
You now know how to add a budget category, but how do you handle those existing categories with (possibly) inaccurate amounts assigned to them? You need to edit or delete existing categories.
