Reviewing your budget ideally is done monthly. It is a time to assess what is going right and what needs improvement. Furthermore, you may find that reviewing your budget throughout the month, in addition to your monthly budget review, is advantageous and leads to more success.
I review my budget weekly, which makes the monthly budget review a very smooth process. Moreover, it allows me time to strategize for the next month. Below I outline my weekly and monthly budget review process. You might find that this method or a variation of it works for you too.
Reviewing Your Budget Weekly
Below is my four-step process, which takes 30 minutes max as long as I do it consistently each week. To be honest, most weeks it takes me about 15 minutes.
Not only do weekly reviews ensure that my monthly budgets reduce my monthly review time, they ensure that I am always on par with my goals.
1. Check bank transactions against your checkbook register
If you can log in to your bank account online, do so. Confirm that all posted transactions match your checkbook register. Remember, you do not need to do a full reconciliation at this point. You can wait for your monthly bank statement. More importantly, use this time to ensure that you do not have any errors. Doing this will save you a lot of headaches later down the road.
2. Assign categories to all of your transactions
Confirm that all of your transactions have budget categories assigned to them. Budget categories are the best way to keep track of where you spend your money. If you do not have budget categories set up, I suggest you read this article to help you. Budget categories are essential for budget reviews.
3. How are you doing?
Next, check in to see how you are doing. If you are using financial software, like Quicken, you can run reports to show your spending per category. Your bank may already have this information as well. Check their online services as many banks have budgeting tools. You can also do this manually.
Whichever method you choose, confirm you are on track with your monthly budget or if anything needs to be adjusted. If everything looks good, then you are finished for the week. If not, check out step 4.
4. Make adjustments
If you are not on track with your monthly budget, it’s time to make adjustments to get you where you want to be.
Below are a few examples of adjustments you can make.
- Overspending in a category requires mindful spending for the remaining period. Set a spending plan for the upcoming week to keep the budget category at or below budget.
- Underspending in a category may mean that you have available funds to put toward an expense in another budget category. Review your budget to see if you can reallocate these funds elsewhere. Perhaps savings or investments? Debt payoff?
- Unforeseen circumstances will affect your budget efforts. It happens, and when they do, you need to make adjustments to your budget.
- Additional income or resources might pop up. Maybe you get a raise, a bonus, or a gift. Add this to your budget. Use it to pay your debt, increase your emergency savings, put it into one of your short-term savings goals, or invest it.
Reviewing Your Budget Monthly
If you consistently review your budget each week, then the monthly budget review will be a breeze. Generally, it takes me no more than 30 minutes each month to review. That includes setting my budget for the next month.
Here is my three-step process.
1. Bank reconciliation
Reconcile your bank statement with your checkbook register. It is really important to do this every month to catch any mistakes. This should be simple if you are checking your transactions during your weekly budget review.
2. Assess how you are doing
Spending
Did you keep your spending at or below budget? If you did, congratulate yourself because that is awesome. If not, then why? Is your budget reasonable for your income and lifestyle, or do you need to make adjustments? If everything looks okay there then you’ll need to address your spending habits.
Financial goals
How are you doing with your financial goals? Check on the progress toward your goals for debt payoff, savings, investing, or whatever.
3. Create a budget for the next month
The final step is to create your budget for the next month. As you set your monthly budget, think about what worked and what did not work the month before.
Be realistic during this step. Ambition is good, but not if you feel defeated each month.
Final words about reviewing your budget
Reviewing your budget each week is a great way to keep you on the path to overall success for the month. I found that when I waited until the end of the month to review my budget, I lost out on opportunities to make changes along the way. It works for me to give regular attention to it.
I hope that this post gives you some inspiration to review your budget more often and stay on top of your finances.
Stay balanced,
Jill