Making a budget is the first step, but also probably the easiest one. The hardest part is living with the budget. With these good habits, you can make living with a budget part of your routine.
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You can download the Top 5 Financial Routines below to get a great start in managing your finances. These good habits will help you manage your budget. To learn about how to put a budget together, read this article.
1. Track expenses and document them at a minimum weekly.
Daily is preferred, but I know it is not always realistic each day.
The more organized you are, the quicker it will be. Keep all your tools together – calculator, pens, pencils, basket or envelope of receipts.
Do not wait to document everything once a month, because it leaves no time to make adjustments to other categories to compensate for over and under variances. This step of tweaking is one of the most important steps in staying within budget.
If you use a credit card, divide the expenses into the individual categories so that you can see how much is being spent in each area.
2. Make adjustments as necessary to get everything back to zero (income less expenses).
It may mean having quick emergency budget meetings to discuss where to adjust it. The sooner you know this, the easier it is to get back on track.
Generally, one person takes the lead in getting the budget prepared and tweaking, but the spouse is needed to confirm they are in agreement. Of course, there is more than one way to work on the budget.
For my marriage, I put the budget together and get input when needed from my husband about what his thoughts are on this or that.
3. Keep each month separate so that you can look back at trends or other seasonal items you might forget.
No budget is perfect – there will be variances. The key over time is to have more history in order to predict better. An example of this is how your electricity bill fluctuates over the year. For months that someone is home during the day more, the electricity bill will increase and there may be other trends during the different seasons that emerge. There will be exceptions to even this, so always be prepared to make adjustments.
4. Check your bank account online to be sure you’ve included all the expenses and make sure the activity you see is accurate.
I’ve noticed a charge before that was not ours and someone had charged against our bank account. We had to notify the bank immediately and ultimately had to get a new account.
5. Compare deposit receipts to ensure that the right amount hits your account.
6. Keep copies of expense receipts to compare to what hits the bank in case there is an error.
With an organized system, you will not need to waste time trying to find all the receipts.
7. Learn from things that worked and those that did not work.
Over time you’ll get to know the best places to make adjustments and budget meetings will not be as often.
8. Make it as fun as possible (I know budget and fun in the same sentence is not natural to some!).
Decide what to do with any monies that you have extra (actual is less than budget). If you don’t need it to go against another category that went over – will you use the money to pay off bills, build up emergency or vacation funds? Or do you want to reward yourself for working hard with dinner or a movie?
9. Reconcile bank statements each month.
This is the best check and balance between what you are tracking and the bank to ensure they match.
10. Determine net worth to see your progress each month.
Many times we just see what we have left to do and forget to see what we’ve accomplished already. Read here to learn more about net worth. This will show your accomplishments.
Download the Top 5 Financial Routines Printable
This printable will help to keep you on track.
Establishing the initial budget is the easiest step. The next and more difficult steps are incorporating a routine to keep you on track. It will require writing down expenses and making adjustments throughout the month. Tips, like keeping each month separate, checking online bank accounts, comparing deposits and receipts, will ensure accuracy. Make it a game to see how well you do. Learn from things that don’t work and things that worked well. Reconcile bank statements and track your net worth. By implementing these good habits, you can manage your finances better. Lastly, give yourself grace. It will not be perfect. Do the best you can and keep working on it.