Try this six-point checkup to refocus, fine-tune your money game and show your money who’s boss!
1. Identify Leaks
If you’re prone to shopping for entertainment value or lunch with your coworkers has become a daily treat, then it might be time to rein it in. The problem is, sometimes it’s hard to identify our own weak spots. That’s where spending reports come in handy, providing you with an overview of how you’ve spent your cash.
… take note of where your spending failed to support your financial goals, and redirect your dollars, accordingly. Crunch the numbers and consider, “Was lunch hour really worth it?”
2. Are You Really Embracing Your True Expenses?
Have you been leaning heavily on Rule Three to cover overspending in the same categories, again and again? Do these same expenses feel essential or non-negotiable?
If you budget $100 for fuel each month and consistently overspend by $25, then it might be time to accept the cost of your commute and adjust your budget. Look for ways to trim down other categories so that you can put $125 in your gas tank each month.
This principle applies to true priorities, too. It might not be easy to pad your budget for those bigger, less frequent purchases, but it’s much less stressful than coming up short when your annual expenses roll around. (I’m looking at you, Christmas.)
3. Clean up Your Categories
Budget categories are part art, part science, and they’re always subject to change (because life). Considering the leaks that you identified in Step 1, above, are there any areas of your budget that could use closer monitoring?
Say, for example, you’ve identified that your post-gym smoothie habit has cost you $800, so far, this year. You don’t want to quit smoothies (they’re delicious), so what if you created a ‘Smoothie’ category and limited yourself to $12 per week? You still get to treat yourself twice a week, but in the next six months, you’ll only spend $312! That’s 500 more dollars to put towards your big-picture financial goals thanks to micro-managing your micronutrients.
And, on the flipside, should you eliminate any categories? If you’ve slowly started to ignore your ‘Cleaning Supplies’ category because you nearly always record those purchases under ‘Groceries’, then it’s probably not useful information. Simplifying might make more sense.
4. Weird Months Are Clues
Glancing through my own spending reports, today, I noticed a huge spike in my spending for April. It’s no surprise, I moved across state, but it was a good reminder that moving is both expensive and inevitable (if you’re a renter, which I am).
If you spot oddities in your reports, use them to refine your budget. For me, in this case, that means setting a ‘Moving Fund’ target so that I’m prepared for the next time I relocate.
5. About Those Priorities
Now that you’ve got a solid grip on your spending, it’s a good time to revisit your money goals. Maybe you set out this year to break the paycheck-to-paycheck cycle, and you did! Nice work! In that case, why not take your money game—and retirement—up a few notches with some sound investments?
Or maybe you’re still chipping away at your student loans? It might be motivating to establish mini-goals to make paying down those balances a bit more approachable.
6. How Do You Feel?
Finally, check in with yourself. Are the financial choices that you’re making today going to positively impact your quality of life for the better? They should.
And can you sustain your current budget without making yourself crazy in the process? It’s true, budgeting is a long-game, but you’ll never make it if you feel overly deprived in the short-term. Make sure to give yourself a little wiggle room if you need it.