Month-end Actions for Budgeting Success
Since you’ve already asked yourself three questions concerning your goals for the month (if not, go back and read Get Those Goals! 3 Qs to Ask Yourself Every Month first) and set up your monthly budget. Now that the month is about over it is time to evaluate how you did this month. Don’t worry if it didn’t work out so well! The first few months can be bumpy when you’re just getting started, but it gets easier with time. Here are three simple month-end actions needed in order to set yourself up for continuing budgeting success.
1. Finish Tracking All Income and Expenses
This isn’t difficult if you have done this all month. If you haven’t been good at logging transactions it will take some time. I like to do it on a weekly basis so I don’t get too far behind. If you use a budget tracking app such as EveryDollar that can connect to your bank account you can download all the transactions at once and simply allocate them to budget categories. I use EveryDollar, but I do not have the Plus version. It is $129.99 a year.
If paying for the convenience of downloading all your bank transactions makes the difference in whether or not you budget by all means pay the fee. I choose not to for the savings as well as the added accountability. You feel the money more when you have to enter it yourself.
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If you are using the cash envelope system you may just find it easier to track spending with pen and paper as you go. Just keep a notebook with your cash. You don’t have to spend money on fancy envelopes; I use the bank envelope from the initial withdrawal for our cash sinking funds. If you do choose to invest in an envelope system be sure to buy reusable envelopes. I am personally not a fan of printable envelopes because ink costs money and I prefer to print as little as possible at home. We’re trying to be frugal and sustainable at our house. You don’t have to spend a lot of money to get organized.
2. Calculate Actual vs Budgeted Amounts in Every Category
After recording all transactions and assigning them to their budget categories it is important to analyze the total actual spending and income versus budgeted amounts. Chances are you will need to readjust.
If you come in under budget in one category consistently and over in another you can simply “borrow” from the category you were under and reallocate it to the category with the overage. It may seem tedious, but these month-end actions are important if you want your budget to succeed. The goal is to eventually be able to put some of these categories on auto-pilot and not spend as much time calculating the budget. This takes time and practice.
Once you actually see what you spend in a given month on certain expenses (cable, lattes, and dining out are good examples) you can decide whether or not to make room in the budget or buckle down and pack a lunch, drink homebrew, or stream your favorite shows. If you need help deciding what to cut check out my article Cut it Out! 7 Budget Cuts to Make Now.
3. Reevaluate Monthly Spending in Relation to Your Monthly Goals
Look back at the monthly goals you wrote out earlier in the month. Were your budget expectations realistic? Did your budget help you make progress toward your goal? Did you follow your budget? These are all important questions and you need to be honest with yourself. If the answer to any of these is no don’t give up! This is the perfect opportunity to reevaluate how realistic your expectations may have been or face your bad habits head-on.
If it seems overwhelming just pick one problem category in the budget and tackle it. Say you spent too much money eating out; pack your lunch and meal prep (bonus points if you batch cook and freeze for later) some easy dinners and repeat after me, “We have food at home!” Say it again now, “We have food at home!” We probably have coffee at home too if we’re being honest.
If you did really well and didn’t spend all the money in multiple categories or just have a few bucks left over, great! Excellent work! Take that money and use it to get you one step closer to your goals! Make that snowflake payment, transfer it to your new sinking fund, or simply cash it out and set it aside for spending money next month.
Practicing These Month-end Actions Makes Progress
This isn’t about perfection. Implementing these month-end actions and using them consistently every month will help you get the traction you need to achieve your goals. It will take a couple of months to get into the rhythm of things, but it does get easier with time.
Chances are it will take a few months of consistency before you can start to see the bigger picture. Each month you should see improvement in your budgeting skills, strengthening of your new habits, and progress toward your goals! The momentum may build slowly at first, but keep moving toward those goals! Financial independence is not an overnight destination.
Don’t Give up!
The important thing to remember is not to give up! It can be discouraging when you first get started and don’t see how it’s possible. Feel free to email me if you need help! I want to see you succeed! I am available for encouragement, can help you get set up on a budget, or just cheer you on.
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