It’s getting cooler, the leaves are starting to change and the kids are now back in school. Fall has arrived. Normally a time of fresh starts for everyone and everything, this time of the year should also be the point where you look at your budget to determine if renovations are needed.
A budget can get messy over time. Categories can be added for certain reasons then forgotten, bank account reconciliations can be overlooked and balances can get out of sync. Not checking on the budget at this time can lead to bigger problems down the line, including a moment where the money in your bank account is drastically less than your budget sheet. Here are a few suggestions on what you should do to keep your budget healthy and happy until the next year.
Clean Out Categories
Check your budget summary. There are probably many categories in there that are no longer used or have migrated to another income or expense section. Take a look to see if they’re still needed. Removing them from a paper ledger is simple — cross them our or erase them. To remove the categories on reports from a software program like Quicken you’ll most likely need to customize the report to delete. And while you’re doing that, check to see if the report is missing any categories your utilize on a regular basis.
Reconciling is a very important part of budgeting because it keeps you honest and helps prevent any fraud taking place on the bank account. This really needs to be performed on a monthly basis; however, sometimes other life events get in the way. Now is the moment to go through all the bank statements from the past months and make sure they match up with the budget line items. And if they don’t …
Sometimes a budget is so messed up that no amount of tinkering can match the balance with that of the bank statement. This may be due to line items never added or balance adjustments improperly recorded. The only way to correct this in some cases is to close it out and start fresh with a new ledger sheet, real or virtual. Of course, this also means creating a new report with all of the categories needed to maintain a regular budget. Again, make sure all categories are ready to review.
There may be situations where debt has been paid off on a certain item at the time of the review. This means the funds that once belonged to that section need to be reallocated to another category in order to pay off another debt. In fact, it’s best to do this on a quarterly basis in order to make your money work for you.