Budgets Don’t Get Much Worse Than This!

If you have ever thought there must be something missing when it comes to personal budgeting and wondered if there was a better way to approach the task, you were right.

If you’ve been reading my e-mails for some time you would know I am pretty critical of the boring old budget format that just doesn’t work.

Today I have an example of an old fashioned ‘two dimensional’ budget to share with you that will most likely amaze you at how badly it failed the test. It certainly did amaze me!



I should explain; Two Dimensional budgets try to balance two things Income and Expenses.

About 20 years ago I discovered what I now call ‘Three Dimensional’ budgeting.

Three dimensional budgets add timing into the equation (i.e. they consider WHEN the transactions fall due) and suddenly what was almost useless becomes extremely powerful.

I’ll use a simple monthly mortgage payment to show you what I am talking about. I think this will shock you!


Two Dimensional Budget

Monthly mortgage payment = $1,000

Total mortgage payments for the year = $12,000

Pay cycle = 2 Weekly

Amount per pay = $12,000 divided by 26 = $461.54

Most people would think that if they deposited $461.54 into a ‘mortgage payment’ account that would then take care of their monthly mortgage payments.


BUT the fact is, in the example below, only one of those 12 monthly payments can be made on time! That’s correct; only one, and it is the last one!!!!!


Three Dimensional Budget

1st monthly mortgage payment of $1,000 is due on 24th of October 2013

Total mortgage payments for the year = $12,000

Pay cycle = 2 Weekly

Amount per pay = $12,000 divided by 26 = $461.54 per pay.

First deposit to the ‘mortgage payment account’ is due on 9/10/2013

The graph below shows what will happen as the year unfolds (in Yellow) and what should happen to avoid the negative balances (in blue).

Budget Graph


Here are the dates and balances behind the graph. You can clearly see there is not one payment during the year where the full payment can be made on time! It is only that last payment of the year that works out.


Whilst enough money was put aside to make all 12 payments over the year, the timing was the problem.

When I realised how easy it was to look into the future and see what was going to happen before I got there, just like in the example above, I got really excited. I could see why I had been going wrong in the past and I knew I would be able to get it right in the future.

I realised I just had to share this knowledge with others. It was too valuable to keep to myself!

Simply Budgets is the software I created to simplify crunching the numbers and dates and it makes it really easy to get the timing right. It allows you to create a plan that suits your needs with targets to aim for every day throughout the next year.

All that is required is a 5 minute weekly check-up to see if your bank balance is close to your target for the day and you instantly know if you have spare money to spend or if you need to pull back a bit till you catch up.

We can all easily find out what our bank balance is in less than a minute these days, but if we don’t know what it needs to be we are flying blind and that explains why it can be all too easy to find we are short of money to pay the bills when they arrive.


  • If you would like to feel less financial stress,
  • If you would like to have more confidence in your day to day dealings with money,
  • If you would like to be able to just spend some money now and then and not have to worry about whether you are going to regret it or not


Simply Budgets ticks all those boxes.

I have a ‘Cash Flow Clinic’ coming up in Brisbane on the 16th of November. If you are someone who really wants to experience these benefits and you feel like you would benefit from spending a day being taken step by step through the Simply Budgets software to learn how best to make it work for you, I would encourage you to attend.

To find out more about the clinic go to https://www.simplybudgets.com.au/financial-education/cashflow-clinics/


If you would like to view a You Tube demonstration of how and why Simply Budgets works so well Click Here

That’s all for now.

Warm Regards
David Wright