Reviewing your budget every now and then is essential because it helps you assess where you stand at the moment and make decisions to perform better financially. A personal budget review tells you how well you're doing. Are you meeting your goals, have you lost direction, are there any unforeseen events that ate into your expenditure, are there future expenditures you need to take note of?
A review lets you know exactly where you stand. The best way to conduct a review is to:
#1- Set aside time
Reviewing your budget is serious, so make an appointment with yourself and dedicate time and space to do it. Put it down on your calendar, so you don't forget it, and doing it this way cements the idea in your mind about how important it is to take your budgeting seriously. It also helps to prepare whatever documents or files you need to do this review.
#2- Breath and relax
If you have done a budget for yourself and you've managed to stick to it, chances are you're already on a good track. There may be some hits and misses but calm yourself down before you sit down and begin going over your budget. Put your mind at ease by reflecting on your goals and reminding yourself there is a good reason why you have to do this. Make yourself a nice cup of coffee or tea and get comfortable so you're not going over your numbers in a stressed-out state of mind. It also helps to have your apps, plans, or the source of your tax returns switched on for easy access. These plans actually make the process of reviewing much easier.
#3- Stay positive
You've been resistant to the idea of budgeting all this time, probably because you've had a negative perception associated with it. But once you change that mindset and choose to see it positively and focus on the benefits that it brings rather than how much you're having to cut-back and sacrifice, suddenly budgeting doesn't seem so bad after all. Reviewing your budget works along those same lines.
#4- Assess Each Category
Reviewing also means evaluating your budget categories. Compare each item to the goals that you set when you implemented the budget in the first place. If there are any gaps, figure out why and what can be done to get you back on track before you slide too far. Evaluating each category is an opportunity to see the progress you made. This is both encouraging and motivating. You now have clear visual proof in front of you that you are more than capable of handling your finances.
#5- Realign and recommit your goals
Once you've done a health check on your finances, it's time to summarize your goals and recommit to the path you want for your next progress. Realigning and recommitting ensures that progress is continued to be made on your financial health. You can take off goals or add to them where you see fit and adjust your expenditures & savings accordingly.
