Staying on track with your personal budget

You’ve taken the first step and developed your personal budget for the year. However, don’t set and forget and then expect to achieve your personal finance goals! If you don’t monitor your progress, your spending habits are unlikely to change.

So, what steps can you take to ensure you’re on track with your Personal Budget?

1. Track your spending. Keep a record of your spending. Consider using an App to keep track; while your bank statement is a great source, some transactions may not be clearly identifiable. Keep receipts for any cash payments.
2. Set aside time each month to review your actual income and expenditure. Your budget should allow you to record your actual results for the month to easily compare to your budget. Also, compare your year to date actual results against your budget.
3. Update your budget if necessary. After a few months, you may feel that your original budget was unachievable or too generous. If so, make the necessary changes to your budget for the remaining months. Remember, your budget shouldn’t feel confining; it’s simply allocating your income to your expenses so you can take control of your money.
4. Involve your family. While it may not be appropriate to share your full budget with your children, get them involved in the process to demonstrate the importance of managing your money. Perhaps allocate a specific monthly amount to family activities and get the kids to plan what to spend it on.
5. Seek independent accountability. Sometimes we start off with great intentions of sticking to budget, then slip back to our old spending habits. Having someone independent hold you accountable will help you achieve your goals. This can be particularly relevant for couples who may not have the same spending habits.
6. Bring fun and light to the process.Budgeting shouldn’t be ominous and scary. While it may not be at the top of your list of fun activities, you can have a bit of fun with it. Maybe you could allocate money towards a treat to indulge in while working on your budget each month.

The enduring value of personal budgeting comes from seeing the improvements in your spending habits and having more money in your bank account. No matter what your personal finance goals are, monitoring your spending and reviewing your budget monthly will help you stay on track.

We are accountants in Newmarket and Cambridge and we can provide independent accountability to help you develop your Personal Budget or keep you on track, so please get in touch!