16 Feb 2013

Budget P3 - Mointoring your budget

So you've identified all your income, expenses and you've determined and documented how much your life style costs you. Congratulations, you have established a blue print of where your money is being spent. No more wondering where your money goes to every month, you now have the answer.

But life likes to throw us curve balls and no matter how well we predict potential costs, our lives and circumstances may change. You may move to a new job/role and your income changes, you have an accident and need to purchase a new car, you decided to renovate that old bathroom, you start a business and is in its infant stages and have no financial backing therefore all costs are coming out of your own pocket, a medical situation occurs in your household and results in a large medical bill you need to pay for. Whatever those changes are you need to update your budget or blue print to reflect those changes.

So how do you track those changes onto your budget? As I mentioned previously a budget is only as good as the amount of detail it contains and needs to be reviewed regularly. I also mentioned in our household we review our budget on a weekly basis. We review what we spent the previous week, we do this using our online banking tools. We always opt to pay for all transactions electronically so we don't need to remember every exchange of money, our banks have done that work for us. So every week we review and document the transaction into our budget.

For every month we create a new spreadsheet (worksheet) with the same categories and items as we identified at the start of the budget process but we keep items blank until that transaction occurs. For example for the Car Liabilities category insurance, registration, green slip, pink slip and servicing would be empty until renewal period approaches. However a category that usually has a transaction every month (at least in our household) are Groceries, Transport, Entertainment and items such as petrol, health insurance, mortgage repayments etc.   

By regularly tracking what you have spent and comparing it to the budget you created at the start will allows you to monitor whether or not you are sticking to you budget, identify any regular spending you didn't account for at the start therefore may need to update your original budget and ultimately know where your money is going. 

So that's my tips on creating and monitoring your home budget. I know it can be very overwhelming and tedious especially at the start but once that initial process is over, as in you've gathered all the information together, the ongoing "monitoring" process gets easier.

I challenge you to really start understanding and tracking your spending via a budget and soon you'll notice how much better you get at saving it. Good luck and if you have any questions about any of the information I've provided, if you're stuck with putting your budget together and would like some help or would like an electronic spreadsheet / template to help you with your budget feel free to email me on gen.y.mum@gmail.com
Related Posts Plugin for WordPress, Blogger...

Share Buttons

Share this post with friends