What Is a Quarterly Budget?

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Woman working on budget in office with laptop and calculator on desk.
Woman working on budget in office with laptop and calculator on desk. (Image: George Doyle/Stockbyte/Getty Images)

Whether working with income and expenses for your business or for your personal financial situation, budgets help manage your money so you don't wind up being unpleasantly surprised when the bills come due. Though monthly budgets are most common, you also have the choice of creating a quarterly budget to manage money.

Monthly vs. Quarterly Budgets

Both monthly and quarterly budgets take expenses and income into account when determining how much money you can spend. A monthly budget considers all of the expenses and income for one month's time. A quarterly budget instead divides the year into four three-month periods.

Advantages

Some expenses occur every few months rather than monthly. For example, a car insurance premium or water and sewage bill might come on a quarterly basis. These bills make creating a monthly budget more difficult, because they may cause one month’s expenses to be significantly higher than those of other months – and possibly greater than the income for that month. Quarterly budgets work better when accounting for these bills. If you have bills that occur yearly, such as magazine subscriptions, divide the cost by four when adding it to the quarterly budget.

Disadvantages

A budget is only effective if you can follow it properly. Short-term goals are typically easier to achieve than long-term goals, making monthly budgets more simple to manage for many. Quarterly budgets also are more difficult to determine when it comes to anticipating variable expenses, such as supplies or utilities. Unless you can adequately predict how much you'll spend in variable expenses, quarterly budgets won't be as accurate as monthly budgets.

Preparing a Quarterly Budget

Once you have decided to create a quarterly budget, it's time to chart your income and expenses. Consider everything you spend your money on over a three-month period. Add regular bills such as Internet access and loan payments, as well as areas of expenses for fun like dining out or going to the movies. Your expenses should not exceed the amount of money you make during the three-month quarterly period. Even better, create a budget that gives you a surplus after the quarter is over, so you can add the money to a savings account.

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