You will run a full monthly close on the past month and write next month's budget from it.
This is the exercise that keeps everything else in the course running. You will run a complete monthly close on the month that just ended, using the five steps from lesson 7.1 and the labels from lesson 7.2, and finish with next month's budget written and a one-page record of what happened. Set aside 30 minutes. The first close usually takes a little longer than that, and the third takes less.
Wei Ling's June close runs through every step as the worked example. Her figures are made up for teaching. June is month 4 of the plans she built in modules 5 and 6.
Pull in the last of the month's transactions from every account, card and wallet on your list from lesson 1.2. Fix any wrong labels, and check that nothing from the month is missing, such as a PayNow transfer or an e-wallet top-up.
Wei Ling tracks weekly, so most of June is already in. She adds the last four days and relabels two PayNow transfers that were her share of group dinners. It takes six minutes.
Next to each category, write three figures: the plan, the actual and the difference. Total the buckets.
Wei Ling's fixed needs came in exactly on plan. Her variable categories look like this:
eating out: plan S$420, actual S$430, S$10 over groceries: plan S$300, actual S$305, S$5 over delivery: plan S$100, actual S$120, S$20 over rides: plan S$100, actual S$95, S$5 under shopping: plan S$160, actual S$150, S$10 under subscriptions: plan S$25, actual S$25, on plan
Groceries belongs in needs, but she watches it with the variable lines since raising it in lesson 7.2. Across the month she is S$20 over. She covers it by taking S$20 off next month's eating out, so nothing goes on her card.
Open your repayment plan from lesson 5.4, your buffer plan from lesson 6.4 and your irregular costs calendar from lesson 3.4. Compare each balance with where the plan said it would be at the end of this month.
Wei Ling's card statement shows S$1,756.04, exactly the month 4 figure in her plan, and her loan is down to S$4,200 as scheduled. The buffer has sat untouched at S$1,000 since April, while the sinking fund account holds S$1,320 from four transfers of S$330, since nothing has fallen due yet.
If a balance is off, find out why now. A card balance higher than planned usually means a purchase landed on the card that should have come from the budget.
For each category that went over, decide whether it was a one-off, a wrong estimate or a habit, and change the plan accordingly: a note for a one-off, a new figure and a matching cut for a wrong estimate, a friction for a habit.
Wei Ling's S$10 on eating out was a one-off: a colleague's farewell lunch. Groceries at S$5 over is within normal noise, so the new S$300 figure stands. Delivery is still a habit, but it fell from S$165 in May to S$120 in June, so the Sunday cooking is working. She keeps the plan at S$100 and adds a second friction: delivery only from Friday to Sunday.
She also acts on May's note. Her birthday dinner comes every May, so she adds it to her irregular costs calendar at S$165, eleven months away, which is S$15 a month. She takes the S$15 from eating out, since that is where the dinner would have come from anyway. Her sinking fund line rises from S$330 to S$345.
Write July's budget line by line from what steps 2 to 4 told you, and check it still adds up to your take-home pay. Then write the one thing you will do differently.
Wei Ling's July budget has needs of S$2,185, now with groceries at S$300, and wants of S$790: eating out S$405, delivery S$100, rides S$100, shopping S$160 and subscriptions S$25. Sinking funds take S$345 and the card gets S$480 of extra repayment, which brings the total to S$3,800. For July only, S$20 of the eating out money goes back to cover June. Her one change is "delivery Friday to Sunday only", and her sinking fund will pay out S$160 for the dental check-up during the month.
When you finish, your close fits on one page: the plan, actual and difference for every category, your debt, buffer and sinking fund balances against the plan, a label and a change for each overrun, next month's budget and the one thing you will do differently. Save each month's page in the same folder, because three of them make up the final project. Start with step 1 on the month that just ended.
Run the close, save a one-page summary with plan, actual and changes, and write next month's budget.
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