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Ask Dave

Is Budget Billing a Blunder?

Ashley wonders about Dave's thoughts on budget billing.

QUESTION: Ashley on Twitter wonders about Dave’s thoughts on budget billing.

ANSWER: It’s fine. Nothing wrong with it at all.

You do understand that what it is—it’s an average of the light bill for the last 12 months. Then they raise it just a little bit, and it evens out your budget. It does go up and down that way. It’s predictable, but then once a year, there’s a “make good.” So if you paid in too much, you kind of get a little break that next month and start again, or if you’ve not paid in enough, you’re going to have to come up with some money. You kind of need to track and watch the little statement as it comes in to make sure that the budget billing is working and that you’re not getting really deep in the hole accidentally because you don’t want to come up with an extra big bill at exactly the wrong month, which is your “make good” month.

I’m fine with budget billing. A lot of people do that—especially when they first start their budgets and they don’t have any wiggle room—because it’s a predictable environment.

Thank you! Your guide is on its way! 

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