How many of you tried to budget, and then found that it just wasn’t working? This was us for a while too. Turns out we were missing some essential steps to make a budget work.
3 Easy Steps to Make your Budget Work
To make your budget work, it’s a 3 step process, not a one and done. If you can get these down, you will be well on your way to making your budget work for you.
1. Create the budget
This is the part that most people get right. You download a free template or set up a Mint account and start dividing out how you think you will spend your income into categories. In this step of the process, you want to make sure everything you spend money on has a category. This means you include:
- Fun purchases
- Loan payments
- Savings goals
- Credit card payments
Literally EVERY SINGLE PLACE your money ends up should be in your budget. You might miss some the first round, but you’ll get it the next time because of Step 2.
2. Track your spending
You need to keep track of where your money is going during the budget period. This is the part of the budgeting process where you write down what you actually spend.
If you did a budget for one month, because you get paid once a month, then you should check in on your spending once a week. Look over your bank and credit card transactions to see if you are staying in budget. Add the transactions to your sheet or in the app.
If you don’t track your expenses you won’t know if your budget is actually working.
Step two is where my partner and I always messed up. Our big mistake was not making the tracking method accessible to both of us. Budgeting as a couple means that both individuals need access to a track sheet to record the expenses. This way you can both see where you are at and be transparent about money.
3. Reflect and revise
At the end of the budget period (for us this is the end of the month), you will take some time to look over your budget. When you reflect, you ‘re looking at all the categories to see how you did, not to judge. It’s important that all transactions are accounted for when you do the reflection process. Ask yourself:
- Did I make my money goals for saving or debt pay off?
- Did I overspend in some areas? Why? Should I adjust for next month?
- Did I forget about a category?
- Did I feel too restricted? Can I change that?
If you’re with a partner, you should do this together. No one person should have all the say over how money is working for the partnership.
Based on your reflection and revision in step 3, you can then start over and create your budget for the next budget period. I wish you luck! If you want to ask me any questions about budgeting with or without a partner please drop them in the comments below.