After you’ve setup and created your budget, you’ve only completed step 1. Now you need to make sure that you are monitoring your budget and course correcting as needed to allow it to continue to work for you. There are a couple ways to do it, but here are the most popular ways to monitor your budget.
The Old Fashioned Way
The old fashion way of monitoring your budget is still used by many people around the world. After you’ve setup your budget, you need to continue to stay organized – put all paper statements and bills in one place. Then, once or twice a month, you pull out your budget when paying your bills and filing your statements, and add up your current month’s spending and income.
Many people still do this on paper, but you can do this using a spreadsheet program, like Excel, as well. You can maintain columns for each month, and fill in everything as you open it up and pay your bills.
It is also important to keep track of your cash spending by saving receipts, and then inputting them in your spreadsheets as you go. If you want to get a little hi-tech, there are phone applications that can help you track your cash spending by either letting you input it into your phone, or by taking pictures of your receipts. However, a better way is to just use a credit card for everything, and that way you can use the monthly statement each month to balance your budget.
The New Age Way
Today, more and more people are using computers and the internet to monitor their budgets. For example, programs like Quicken and Mint both allow you to input a budget based on your historical spending, and then they track how you’re doing compared to your budget live for you.
Quicken, for example, lets you setup a budget using their planning tools. Then, as you update and categorize your account transaction, it will update your current income and spending compared to your budget. The program is pretty smart as well – if you get a raise and your salary is higher consistently, it will ask you if you want to change your budget to match the new amounts coming in.
Mint is another very popular choice because it does what Quicken does, but it is free and you can do it online no matter where you are located. Furthermore, it attempts to update your transactions when you are offline, so that when you log into your account, everything is already updated with your most up-to-date transaction information. Mint also tries to be more intuitive than Quicken because it categorizes all of your transactions automatically (as best as it can). This takes out a lot of the headaches of putting together a budget.
With the new age way of monitoring your budget, it makes it easier if you use a credit card for everything, since the account will update online. For cash spending, you have to still input those manually into these software programs.