Reviewing Budget Just as Important As Creating One

A budget plan may sound like a very simplistic and unrealistic way to manage your money. Some may even think it is ineffective in the grand scheme of things. The simple fact is that a budget can’t work unless you make it work. The way you make it work is by sitting down, creating it and then reviewing it regularly.

You won’t know how effective it can be until you until you give it a try.  If you are struggling to make ends meet, save money or to balance what you make with what you need to spend, it can’t hurt to give the budget thing a try. Not just by making it,but by actively using it.

Budgets range from very simple to very complex. There is software out there to help you design a budget that will work best for your needs and your lifestyle.  A simple piece of lined paper or blank word document can work just as well as any extensive software system.

Once you complete your budget the next biggest factor for success is actually reviewing it and using it as a guide for your personal financial plan. A budget should be an ongoing, changing, working document that changes as your finances change.

There are a few things to remember when it comes time to put your budget to work.

• When you are just getting started with a budget record every expense, even the small ones.  Train yourself to save receipts and track your spending for a certain amount of time, such as a month to start.  Categorize your expenses and record all of your spending in each category.

• Record every little expense for a month to gage how you are spending your money and how much for money goes to each category.  Compare your spending to your month income and see what is leftover. 

• Once you have the basics down, decide how often you should review your budget.  When you are just getting used to using a budget a frequent review is recommended.  Looking at your budget weekly, biweekly or even monthly can help keep you on track with your spending.

 • Each month can be very different than the next and planning and reviewing your budget can help you to plan out months with heavy expenses. Keep track of non routine expenses such as birthday gifts, holiday expenses, months when your car insurance is due or summer camp payments. These are larger expenses that should be put onto your budget sheet. Once you have them down you can take a look at the categories that you are spending and where you may need to cut costs to ensure that you can make other one time payments.

 It is recommended that even if you only review your budget once a month, you create a system that allows you to think ahead. For example:  using a yearly calendar that allows space to write down anticipated monthly expenses ahead of time can help you plan out your budget with more detail.  Make it a point when you review your budget to look at each month and try to jot down expenses that are known to occur in that month. If nothing more it can help you plan for next year more effectively.  The more you use your budget the better it can work for you.