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After I told you how I complete my monthly Financial Checkup, I received a question about how I complete my budget on a monthly basis, so I thought it would be a great topic to bring here.
My process may seem like it takes a while, and it did when I first started, but now that I have a process it only takes me about 15-20 minutes.
This is what I do at the end of the month after I complete my Finacial Checkup.
I like to list out all of my expenses for the upcoming month first. To do this, I like to use the Financial Toolkit Expense Tracker.
I list all of my normal monthly expenses first and then I list any additional expenses I need to pay for in that month.
That includes adjustments to old goals or adding new goals, birthdays, travel, events, etc. Note: Birthdays and travel typically come from my sinking funds but I always add them to my budget because it helps me track my spending.
The Expense Tracker automatically totals my expenses so I already have an idea of how much I plan to spend for the month.
Once I have completed the Expense Tracker I update my Paycheck Budget template.
Each Month of the Paycheck Budget Template has 5 payday columns along with a monthly total. So it doesn’t matter if you get paid weekly, bi-weekly, twice a month or monthly, it can work for everyone.
I get paid bi-weekly, so I only need the first 2 paycheck columns, sometimes the third.
Since I am salaried my income is normally the same so I add the income I expect to receive and then for my expenses, I split my expenses for the month in half, the first half is allocated to the first paycheck and the second half is allocated to the second paycheck.
I have been doing the half payment method for a long time, it’s emotional. I didn’t like a large amount of money leaving my account so it was a way to trick my brain, but it actually made my budgeting and bill paying process easier so I have stuck with it for all of these years.
Once I update the Paycheck Budget Template, the monthly column will show how much I expect to receive in income for the month and the expense section should have the same total as the Expense Tracker.
I make an effort to follow my budget for the next two weeks and a couple of days before my next payday I take 15 mins to update my actual spending in the Paycheck Budget Template which gives me an idea if I am on track for the month.
If I am on track then I continue doing what I’ve been doing. If I am not on track, overspent in one category or another, then I can adjust accordingly for the rest of the month, to avoid going over budget so I can stay on track to reach my financial goals.
How do you set up your budget each month? Let me know in the comments below.
