Comments on: Using A Moving Average In Budgeting

By: Matt

Matt — Sat, 16 Jun 2007 15:42:31 +0000

What about tracking all of your utilities into one monthly average, instead of individual ones. This would compensate for seasonal differences, where electric might be more in the summer due to ac, while gas is more in the winter due to heating.

By: Bill

Bill — Thu, 07 Jun 2007 12:44:23 +0000

You can start the “equal payment plan” anytime you like with my electric utility.

I started it in June – so I’m using much more power than I’m paying for for the first 4 months – we settle up in May each year.

So the utility carries my debt.

By: Madelaine Gogol

Madelaine Gogol — Tue, 05 Jun 2007 13:50:09 +0000

Ooh, good idea. I use a moving average to track my weight, but never thought about using it in budgeting.

Excel is good, but if you really want to geek it out, try R (http:/r-project.org/).

By: Chris Burgwald

Chris Burgwald — Tue, 05 Jun 2007 13:39:48 +0000

Living in the Midwest like Trent, we also see quite a shift in utilities costs over the course of the year; in our case, though, our furnace uses natural gas, so our electric bill is lowest in the winter and highest in the summer… when you graph it, our electric bill & gas bill are very “wavy”, inversely related, of course. Because of this, a moving average doesn’t work as well. Instead, every month we look at what we spent in electricity & gas during that month the previous year and pad a little to be safe. We’ve been budgeting for two and a half years, and it’s worked out pretty well to this point.

By: Keesa

Keesa — Tue, 05 Jun 2007 13:32:19 +0000

You mentioned that your checking account earns you interest? I’d be very interested in knowing what bank you’re with…I certainly don’t earn interest on the money in my checking account!

By: Amy

Amy — Mon, 04 Jun 2007 20:54:03 +0000

I use the moving average for every category in my budget. It’s particularly useful for things like gifts (which are very seasonal) clothes (I do the vast majority of my shopping during the January and July sales) and occasional expenses like home repairs. I even set up my spreadsheet to average some expenses (like food) over three-month intervals, and others over 12 or even 24 month intervals.

Yes, I am an Excel geek.

By: GHoosdum

GHoosdum — Mon, 04 Jun 2007 20:44:03 +0000

Sorry, that should have been to Andrea, not alicia. Oops!

By: GHoosdum

GHoosdum — Mon, 04 Jun 2007 20:43:36 +0000

@alicia: Well, some factors to consider are the building envelope, efficiency of the HVAC units, and volume. Vaulted spaces and high ceilings (more and more common in new construction) take more energy to condition than the traditional 8 ft. ceiling height.

If you’re significantly increasing the volume that you’re conditioning, you might want to build some excess into the budget. For example, my parents moved into a home with 12 foot ceilings on the ground floor. That factor increased their heating and cooling bills significantly.

I, on the other hand, live in a 1970s home with 7.5 foot ceilings (the builder was cutting costs) and my 1500 square feet cost about the same amount to condition as did my previous 1000 square foot apartment with 9 foot ceilings.

The efficiency of the new HVAC system might actually cause your bills to drop in the new construction home. But since I’m a conservative budgeter, I’d personally stick with the higher number until I was proven wrong.

By: alicia

alicia — Mon, 04 Jun 2007 18:37:41 +0000

Aw, there’s nothing wrong with being an Excel geek. Math is an especially refreshing salve for a bad case of OCD. And I’ve wondered if I should be checking up to make sure the utility companies calculate the payments correctly. Overall, the amounts have seemed right and have gone down or up when I expected they would. (People’s Energy recalculates every six months, but I think ComEd only does it once a year.)

By: Andrea

Andrea — Mon, 04 Jun 2007 18:20:29 +0000

Any suggestions on how to handle this if you are moving to a new construction home? The space difference between our current place and the new place is 11 sq. ft. so I was just going to use our current values, but they are in difference cities so I’m not sure if the rates will change.

By: Jim Lippard

Jim Lippard — Mon, 04 Jun 2007 18:16:55 +0000

I’ve not signed up for my utility’s budget pay service because they always remind me about it at the beginning of a period of low electric bills–meaning *they* get the interest on the float, not me. I also would rather feel the full pain of the high bills, as an incentive to myself to minimize electricity usage.

I use the time-of-use plan, and have programmable thermostats to shift usage to off-peak.

By: Lifeguard

Lifeguard — Mon, 04 Jun 2007 17:46:49 +0000

Like alica, I use the utility companies’ budget pay service. It varies by +/- $5 per month, and it is less work. For my budget, I use the high-water mark for the utility bill (electricity, water, gas) for the past 12 months.

By: GHoosdum

GHoosdum — Mon, 04 Jun 2007 17:19:27 +0000

No, the moving average is calculated as you replace the oldest value in the spreadsheet. You’re simply using the normal AVERAGE function in Excel and making it a moving average on your own.

Trent, unless your new home is significantly more energy efficient than your old apartment or you very rarely use HVAC, I would pad the budgeted number by the ratio of square footage of the new home to the old, just to make sure that the additional conditioned space is taken into account.

By: Tyler

Tyler — Mon, 04 Jun 2007 17:02:34 +0000

So how does this all work out in Excel? Is a moving average formula in Excel different than the normal average?

By: Ted Valentine

Ted Valentine — Mon, 04 Jun 2007 16:51:28 +0000

alicia – You’re only a crazy fool if you like spending your free time in front of a spreadsheet doing budget calculations.

By: alicia

alicia — Mon, 04 Jun 2007 16:40:36 +0000

So… am I a crazy fool for using the utility companies’ budget pay service, in which they bill me the same amount every month, and adjust the amount a couple times a year? (I’m in the midwest too, so the regular amounts go from practically $0 to $250.)