We've established that we need to constantly monitor or finances, so what do we do with that information?
Review Monthly
At the end of the month you can breathe a sigh of relief. Pat yourself on the back, whether you made it in budget or not – you’ve given it a good crack and a fresh new month is rolling out ahead of you.
Use the monthly review to see what went well and what didn’t? Were you wildly out of kilter with your expectations of what you would spend in a certain area? If so, then you know you’ll need to budget more or less this coming month.
Look ahead at your calendar – what’s coming up? Set a new budget and crack on. If you ended up with surplus money – congrats! Put it to one side and DO NOT SPEND IT. We’re going to use that surplus to ‘age your money’.
Rinse and repeat. Track daily, adjust weekly and review monthly, and make changes going forward. You’ll make mistakes, but don’t get downhearted. Perfection is unattainable, but proficiency comes with practice.
Roll with the Punches
OK, so far so easy really. Well, simple, if not easy. But life has a habit of throwing us for a loop sometimes. A BIG bill comes in. We completely lose it and end up significantly overspending. Don’t give up, just get back on the wagon and start again. Set a new budget from where you are now and work at it.
It might mean a radical rethink of what you spend on what. If you really want to win with this, you need to regroup. I really wish there was an easy way, but there’s no magic method to just make the budget balance – you will need to make difficult decisions and execute them.
In the next blog series, we’ll look at about debt elimination, and part of that is having an emergency fund. If something really big and unexpected happens, like a massive repair bill to the car, or the boiler blows up and you have to shell out for a new one, then that’s what the emergency fund is for.
If you have to dip into your emergency fund, then you’ll need to budget to top it back up again, which might take a few months. The control you have over your money will mean that you’re still in a much better position than you might have been if you had to put that big bill on a credit card.
Rolling with the punches is a state of mind. Rather than throw your hands in the air and quit, saying that you’re just not cut out for sticking to a budget, instead think about what you can do. Can you grab an extra shift or two to make the budget work? Can you cadge a couple of meals off your parents to reduce your food bill?
Ultimately, budgeting is about money in and money out. If something happens that means that it’s unavoidable that your budget is blown, you need to go into damage control mode and become even more laser-focused. Move stuff around, rethink your spending patterns and try to get back on track.
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