The holiday shopping is in full swing, which means you’re probably spending more money than usual. That’s why we need to talk about your budget! Are you staying within your budget, or have you gone a little over? Either way, it’s important to look over your budget at the end of each month, so you can make changes for the next month. Since we are getting close to the end of the year, it’s the perfect time to think about this! When evaluating your budget, you need to go through a step-by-step process, which we’ll talk about below.
Compare Your Spending vs. Your Planned Spending
Once you’ve created a budget, you need to track your spending throughout the month. This way, you’ll be able to keep track of overspending, underspending, or staying within your budget for the month.
If you find that you spent more than planned, try to think of ways you can reduce your expenses for next month. If you stayed within your budget, you’re doing great, but you may still find changes you need to make for the next month.
Evaluate New Income and Expenses
Not every month will be exactly the same, that’s why a budget is specific to each given month. So, you want to think about the next month, and figure out if any incomes or expenses are changing. These changes can occur from a job loss, getting married, having children, and from the holidays.
Review Your Financial Goals
We know that income and expenses can change, but financial goals can change as well! If you pay off debt, you may have a significant amount of more money to spend each month. Your financial goals should always be included in your budget.
Make Changes to Your Budget
Once you’ve figured out your income, expenses, and financial goals for the next month you can modify your budget where changes are needed. Sometimes it may be a drastic change, and some months it may not change much at all.
Identify Spending Issues
After you’ve evaluated your budget for the next month, you may discover issues in your spending. Maybe you used your credit card too much or took too much out of savings, which means you need to put constraints on these things for following month. Before you make a purchase, think about how much you need the item. We are all guilty of buying things we don’t really need, especially when trying to save money.
Review Your Budget Monthly and Annually
As we said before, it’s important to review your budget at the end of each month, but also annually. An annual budget reveals a bigger spectrum of spending patterns and is a great way to see where your money is going over longer periods of time. That way, you’ll be able to achieve your long-term financial goals.
Sticking to your budget is so important, but it’s ok to treat yourself every once in a while! Being able to treat yourself makes it even more motivating to stay on track each month. And remember, Eastex CU is always here to help you with your finances.