I know many of you are probably getting tired of me discussing about reconciling a budget.
Today, will be my last post on this topic. I promise you that I will not be discussing about this any further after today.
I will discuss how to finish reconciling your budget for the previous month.
Get the list, report, or spreadsheet you created in the last step (from yesterday’s post) out and I will tell you what you need to do next.
- If you created a list (if you used a notebook or check register), add up all of your expenses together to get an overall expense total for the month. Subtract that number from your total income you got. Write down the result of that subtraction and circle it. That number will determine if you have saved money or not in the previous month.
- If you created a spreadsheet, go to the cell of the last expense in the 4th column of your spreadsheet (what you had leftover from what you actually earned and spent). That number will determine if you have saved money or not in the previous month.
- If you printed out a report (that we discussed last post), go to the bottom of that report. There should be a number on the bottom of that report. It will tell you if you have saved money or not in the previous month.
If you saved money (a positive amount), you are did a good job managing your finances last the month and sticking to the budget for the most part. However, the next part I’m about to discuss might help you improve more.
If you spent more than you earned (a negative amount), you need to analyze what went wrong last month. This is where the next part comes in.
Now it’s time to compare what you actually earned and spent to what you budgeted for the previous month.
- Find your total income number from what you created and compare that with what you budgeted. If you didn’t make as much as you budgeted, you might want to lower your income a little bit for the current month. It might be one of the reasons you had a negative amount in the last step.
- Compare the amounts you actually spent on each expense to what you budgeted. If you spent a whole lot more in some areas than others you might want to adjust that number to cover it or find ways to start saving money in those areas (I will give you those tips in some of those areas in upcoming posts) It might be another reason you had a negative amount in the last step.
- If you had a positive amount from the last step, you might want to create sinking funds for some areas that you were under budget on. I would recommend doing expenses that will vary (e.g. Utilities; Gas/Car Expense)
If you had a positive amount, you might want to put some of the money you saved up towards your debt payments, emergency funds, special sinking funds (e.g. Christmas Fund), or your personal savings account (minus the sinking funds for flexible expenses we just discussed).
If you had a negative amount, the budget needs a makeover (for everything to go smoothly again). I will help you do that in upcoming posts.
Please let me know if you have any questions.
If you liked this post, please like, subscribe, and share with your friends.
Thank You and Have A Great Day