Spring Cleaning Your Budget
According to the calendar (although sadly, not the thermometer) Spring is here, which represents an excellent opportunity to re-visit and fine tune your budget. You spring clean your house- why not spring clean your budget?Reflect
Spend an afternoon or an evening examining your spending habits over the last couple of months. Are they in line with what you had anticipated?
Make note of shortfalls, overages- and any discrepancies in what you had allocated.
Cause and Effect
To decide where to implement budgetary change, you must first identify the source of the problem.
Is it a case of straight overspending in a couple of areas, not anticipating some expenses, or miscalculating?
If it is a case of miscalculating, adjust your budget to reflect the difference. It may be helpful to break down in more detail (i.e. include more line items). For example, instead of “entertainment”, use “eating out” and “family activities” or “movies” or whatever your case may be.
More detail allows you more information- which makes it easier to capture a full financial snapshot.
It’s not You, it’s me
Is the source of your budgetary shortfall a case of you not sticking to your plan and overspending? Don’t get frustrated and upset. The whole point of revisiting your budget on a regular basis is to tweak it in realistic places to make sure you are on the right track.
Speaking of reality, were you realistic in your targets? Do they match your lifestyle? Perhaps you had hoped to be more austere in your spending, but did not resist temptation a few times? Did an unexpected expense appear that threw all the other spending out of whack?
Do you have an expressed goal? Is it attainable? Based on where you are currently at, and where you thought you’d like to be by this point in the year, does your goal make sense?
If not, you have two options: change your budget, or change your goal. If you’ve already tweaked your budget to the max, then it may be time to realign your goals- whether to change them altogether, or to perhaps alter the timeline.
Having appropriate goals is essential to keeping on track and keeping motivated. Sticking to a budget is a long-term event, which requires focus. Having a goal from which you consistently fall short will make you unnecessarily feel like a failure.
It may also be helpful to set seasonal goals (i.e. set aside some savings through the spring for summer vacation or set aside some savings in the fall for winter’s holiday spending).
If your overspending was the case of a one-off, unexpected expense, do you have an emergency cash fund to defray some of the costs? If not, and your budget is out of whack, it is a good time to consider including one (even if it is a small amount).
Emergency spending (i.e. housing or car repairs) comes when you least expect it- and usually requires quick payment, which makes you more likely to dip into credit.
Whether it is in reference to your debts or to your bank accounts, it is generally a good idea to consolidate. When it comes to debt, you can attack the amount you owe more expressly, generally paying down the debt more quickly while paying less out in interest.
When it comes to your bank accounts, it is easier to know what is going in and going out, if it all flows through the same location.
Either way, consolidation lends to streamlining- which can assist in a clearer picture- which can help deliver you to your goal.