How to Plan a Level Pay Budget

Enjoy the financial roller-coaster from the sidelines with a level pay budget.

Enjoy the financial roller-coaster from the sidelines with a level pay budget.

Paying the bills each month can feel like you're on a roller coaster -- at least financially -- when the amount due fluctuates each month. Instead of waiting each month to receive your bills before assessing the damage, implement a level pay budget that can help calm the financial turbulence each month. A level pay budget allows you to calculate a monthly budget that covers the ups and the downs of your bills while consistently paying the same amount each month. Plan a level pay budget, and you'll never have to put up with annoying fluctuations every month.

Research how much your monthly bills cost over the past year. Check old billing statements, review your accounts online or ask your service providers or lenders for a 12-month history of your payments or billing amounts. Exclude any one-time bills that are unlikely to occur again in the next year.

Tally exactly how much your bills were each month by adding up all the bills for each month. Some months should be higher than others, as your credit card balances or utility bills often fluctuate throughout the year. Write down the total amount of your bills for each month.

Calculate how much your monthly bills totaled for whole year by adding the total amount of your monthly bills. For example, if your bills totaled $2,500 in January and February; $2,600 in March and November; $2,400 in April, May, September and October; $2000 in June, July and August; and $3000 in December, you'd have a total of $28,800 for the year.

Divide the total of your bills by the number of months -- for a year's worth of bills, you would calculate 12 months. For a total of $28,800 divided by 12, the sum is $2,400 per month. Based on this example, $2,400 is the minimum amount you would need to budget each month to cover your bills with a 12-month level pay amount. For this plan to work, you must build savings each month to cover the higher months.

Verify that your bills will be covered for the next three months with the 12-month level pay amount you calculated. If you begin the plan during months where the costs are lower, such as the summer months, your nest egg will build. However, if you begin this plan during months where your bills are actually higher, such as during the winter months, you will initially need a higher level pay amount until your bills drop lower than the 12-month level-pay mount. In this case, analyze the highest billing month last year, and budget for that amount monthly until you have savings.

Reassess your budget periodically to make sure your level pay budget plan is still on track. It is a good idea to review your budget at least once every three months. Compare your monthly expenses this year with those during the same month last year. If you notice a trending increase or decrease in expenses, you will want to adjust your budget accordingly.

Items you will need

  • Calculator
  • Records of your bills for the past 12 months


  • If you have no billing or payment history, or your previous records don't reflect your current situation, you can always create a level pay budget by estimating what your bills will be for the next 12 months. How well this will work for planning a level pay budget will depend on the accuracy of your estimates.
  • If you have recently rented or purchased a new property, you may be able to find out how much the utilities have cost in the past from the previous owner, real estate agent or landlord.
  • You can calculate a level pay budget using a history of your bills for less than a year. Simply add the monthly totals up and divide this total by the number of months you have data for. However, because bills fluctuate throughout the year and often during certain seasons, using a shorter bill history may cause your level pay budget to be less accurate.
  • If it is only your utility bills that fluctuate, you can often request a level pay plan directly from your provider -- in which case, they do all the calculating for you.


  • For a level pay budget to work, you must exercise self-control. Avoid temptation to spend any of the money you budgeted for bills during those months when the actual amount of your bills is less; otherwise you'll be back at square one.

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About the Author

Sara Mahuron specializes in adult/higher education, parenting, budget travel and personal finance. She earned an M.S. in adult/organizational learning and leadership, as well as an Ed.S. in educational leadership, both from the University of Idaho. Mahuron also holds a B.S. in psychology and a B.A. in international studies-business and economics.

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