No matter how you keep track of your spending, your budget shouldn’t be something you do blindly. Realistically, you can’t just copy and paste your budget from month to month and expect everything to add up the same way. Life has a way of throwing curveballs into our budget when we are least prepared for it. And spending always fluctuates. Let’s answer som of those burning budgeting questions you have.
There’s nothing worse than thinking you have more spending money than usual, spending it, and then remembering that one major expense that you forgot to pay. The better we keep track of what we’re spending and why, the easier it becomes to make necessary adjustments in real-time and save money more often.
If you’re ready to get your spending under control, start asking yourself these budgeting questions near the end of each month.
How Did My Spending Compare to My Projected Spending?
While it might seem obvious, it’s important to ask yourself how your actual spending compares with how much you planned to spend. In other words, ask yourself: how closely am I sticking to the budget I set? Does my spending match up with the amount I’ve allotted to spend in each budgeting category?
Even if you feel like you’re on track, make it a point to as yourself as a sort of monthly check-in. If you’re sticking to your budget, you should ultimately wind up with money left over, which brings us to the next question you should be asking yourself.
What Should I Do With Surplus Money From Each Month?
Let’s say you ended up spending less than you budgeted for last month. Nice work! Now the question becomes, what should you do with that extra money? Well, that depends on what you want to do with it.
Realistically (and responsibly), you have a few options. You can let that unspent money roll into the upcoming month’s budget. You could stash it away in one of your savings accounts— whether you build your emergency fund, your sinking fund, or your travel fund. Or, you could invest it. Perhaps you want to build a personal IRA or a taxable brokerage account. You could also give back and donate some of it to charity. Maybe treat yourself.
Regardless of what you do with it, it doesn’t all have to go to one place. However, you should make a conscious decision about where it goes so that you can continue tracking your spending habits.
What Was The Reason For Any and All Overspending?
Perhaps you spend more money than you anticipated. It happens to the best of us. So instead of beating yourself up about it, retrace your steps and do a little reflecting. What did you buy when you were overspending? How much did you spend? And more importantly, what led you down that path in the first place? Much of the time, figuring out what triggers us to overspend is the first, and perhaps biggest, step in getting our spending under control. And sometimes, we spent more than we intended because of an unforeseen emergency. So look back to sort it out.
Is retail therapy your go-to after a stressful week at work? Did an unexpected bill put a dent in your typical budget? Did you splurge on takeout more than once in the same week? You might be surprised how a little overspending here and there can add up. You’ll also get the chance to look at your budget and figure out if you forgot to factor in a major expense or if the financial limitations you’ve set on yourself are just impossible to abide by.
From there, figure out what you could do differently next month, even if it’s just being a little more self-aware of how and why you overspend.
Do I Need to Adjust Spending Limits for Upcoming Month?
When it comes to building a budget, don’t be too rigid. Life is full of surprises and sudden expenses. No matter your situation, your spending is going to fluctuate. So allow yourself a little wiggle room with reality in mind. Obviously, some budgeting sections (like rent) will remain consistent. Others (like your electricity bill in winter and summer) will not always remain the same. Month to month, it’s important to budget with the fluctuating nature of certain bills in mind and the fixed bills fully accounted for.
As for adjusting your budget with the next month in mind, take into account what you have on the horizon. Do you have a special occasion to save up for? Are you taking a trip in the coming month? Obviously, these pending plans will require some tweaks to your usual budget.
Also, take a moment to look at each category. You should adjust your spending limits in any category you’re consistently coming in over budget or under budget.
How Do I Feel About My Purchases?
Along with reflecting on the money your spending, take a moment to notice your feelings associated with your spending, especially purchases that might fall into the category of overspending. Do you feel those purchases were fully justified? Are they things that you need? If you could go back, would you still buy the items without hesitation? And do you feel satisfied with the money you’ve spent?
Or, do you feel as though you have wasted money that if you had it in your hand again, you might not spend it at all?
If your spending comes with a feeling of regret, you might need to abide by the 24-hour rule. When you catch yourself about to spend money, give yourself some time to think about if it’s really something you need.
If you return 24 hours later and still really want it, buy it. But on occasion, you may notice the urge passes like a sudden craving that went away on its own. You may also notice your impulsive spending diminishes significantly.
Read More: Common Mistakes That Lead to Bankruptcy
Am I Moving Toward My Money Goals?
As you’re wrapping up one month’s budget and starting to create the next, there’s no better point to assess your progress. Are you consistently working towards your money goals? Are you saving? Is your credit score improving? How far away are you from paying off your debt? Overall, how much headway have you made thus far?
If you’re on the right track, you’ll likely walk away inspired to keep making strides. If you’re way off, it’s a great opportunity to reassess what needs to change in order to move towards your goals, starting today.
Your budget’s primary function is to not only make a concrete plan for your money but to help you meet your financial priorities and goals in a proactive way. If you’re paying your bills on time and your emergency fund is growing, that’s great. But make sure that your long-term goals and bigger dreams are being budgeted in as well.
What looks like “extra” money might really be best saved in a retirement savings account. But your money goals are for you to decide and you alone.
Where Can I Cut Back on My Spending?
Asking yourself where you can reduce spending is one of the most crucial questions of all. Once you eliminate unnecessary spending, you’ll not only put way more money back, you’ll free up some wiggle room for if and when you inevitably need it.
So ask yourself right now: what’s the first thing I can let go of? For me, it was letting go of subscriptions to magazines that I barely read and no matter how much I love a good coffee shop, I make coffee at home more often than not and it saves a pretty penny.
But don’t limit cutting back to your discretionary spending. Look at certain essential purchases and see how you might reduce certain costs.
How Can I Bring in More Money?
You might be a pro at budgeting. If you’re lucky, you may be rarely run into trouble with overspending or miscalculations. But let’s be real, if you’re really going to take your money-savvy skills to the next level, it’s time to ask yourself how you could make more money and start making it.
This isn’t just about making ends meet. With your biggest money goals in mind, it’s time to increase your income. Whether you ask for more hours, work overtime, or ask for a raise, start with the job you have and see where financial growth is possible. You could look for a side hustle or secure other forms of passive income. Or when you ask yourself some really tough budgeting questions, you may ultimately realize it’s time to start hunting for a better-paying job.
Every time you ask yourself these questions, keep your focus on your money goals, the betterment of your financial health, and how you can continue striving towards being in a slightly better financial place than you were yesterday.