How often are you checking your budget?
My guess is that your budget isn't something that you sit down and analyze every single day.
And, that's not necessary.
But, maybe you have some financial goals. Like building up a solid nest egg, or saving for a major purchase. According to a recent study by Capital One, more than a quarter (27%) of Millennials say that establishing a solid nest egg would give them the biggest feeling of financial accomplishment.
A budget plays a critical part in financial goal-setting. In fact, a budget is the only way to get a clear picture of what you make and what you owe. Knowing this information is a huge value.
Why tracking your budget is important
"I have a general idea of what I spend, why do I need to keep track?"
A general idea isn't going to cut it.
Budgets are financial tools that tell your money where to go, so you're not left in the dark with your spending habits. If you continuously guess where your money is going it's extremely hard to stay on track.
Imagine trying to count calories for an entire week without writing anything down. Chances are, you'd forget half of what you ate, making your calorie-counting way off. It would be pointless to do if you don't keep track. The same goes for budgeting.
If you're not looking at your spending, how will you know if you're on track?
It's easy to remember big expenses like rent, car payment, and the electric bill; but it's a lot easier to lose track on the little things: lunch with a friend, coffee in the morning, a movie ticket on the weekend.
The small, miscellaneous expenses end up throwing the budget off track.
Okay, so how often do you need to check in?
Monitor your spending daily.
For example: If you use your debit card for all purchases, no need to write anything down. You can find all of your spending information in your online banking account.
You can record what you spend with cash in a small, pocket-sized notebook. Don't leave anything off of the list. Even small things like a snack from the vending machine or parking needs to be recorded.
Keep your receipts. If you don't have time to write everything down, grab the receipt and put it in an envelope. Then, you can look things over later.
Analyze your budget every week.
Say every Sunday is your Budget Day, you would look back on where you spent money throughout the week. Did you spend a lot on eating out? On beauty? Fitness? Record what you spend, and use a budget sheet to help you categorize your spending and reallocate funds if necessary (see below).
Budget tracking checklist
In order to reach your financial goals, track your daily spending and analyze your budget at the end of each week for the most accurate picture.
- Small, pocket-sized notebook and pen
- Carry this notebook with you to write down any extra expenses you pay with cash. This way, you won't forget about little things, like a coffee or parking.
- Envelope for receipts
- Keep a copy of your receipts to double check in case you forgot to record an expense.
- Online banking
- When you use your debit card, you can easily keep track of your spending online. Remember, a transaction sometimes takes a few days to process. Also remember to check all accounts if you use more than one debit card.
- Budget sheet
- Use a budget sheet to categorize your spending, and organize your spending.
Good luck with your budget!