How to Manage Your Budget
Now that you know how to build a budget and why budgeting is important, the question that’s probably on your mind is, “What’s next?” How do we hold ourselves accountable and ensure we’re sticking to the budgets we’ve agreed are so important to a healthy financial lifestyle? What I know for sure is that determining the best way to manage your budget will be different for everyone.
Hold Yourself Accountable
Part of managing your budget is reviewing your spending each month to see if your income and expenses are falling into the ranges you have outlined. If they are, great – continue this another month! However, if you are spending more than you had allocated, the next step is holding yourself accountable. Allow me to offer up a few options for doing so:
- Let others in: A common obstacle in obtaining goals is not having anyone there to help. Find a parent, a spouse, a partner, a sibling, or a close friend you would trust with this kind of information and let them know what you’re trying to accomplish. Challenge them to check in on your progress and keep you honest.
- Set a schedule to revisit: The build a budget article mentions understanding your income, debt and ongoing expenses. Obviously, these things all change overtime. Make sure to check-in every few months and see if there are any tweaks that could be made.
- Simplify your process: This may be the most important piece if you can find a tool to help. Gathering all the information to build a budget and set goals can be an extremely daunting task. Look for options through your bank that allow you to manage your personal finances through a more automated, electronic process.
Use Budgeting Tools
Regardless of your success in sticking to your budget, an effective tool will help you understand all aspects of your finances. You may find these tools helpful as you review your spending totals at the end of each month. Some will go so far as to show you what categories you’re spending in (living expenses, groceries, entertainment, loan payments, etc.) and what that looks like as a percentage of your total spend each month.
If you can get your information in this more visual format, you can easily set goals based on your average monthly spending in each category. Once the goals are set, you can ask to be notified if and when you’re getting close to reaching your budgeted amount for any given category. Budgeting tools are a great way to add some automated accountability.
See if your bank already offers a budgeting tool first. For example, Bankers Trust offers a Personal Finance Management tool via online banking that can accomplish all the tasks described above at no additional cost to customers. Many banks recognize how important it is to understand how to manage your budget, and we strive to help in every way we can.