How To Reset Your Budget

Things come up; things happen. If you have ever experienced a budget mishap and wanted to give up on budgeting, this blog post will assist you with pinpointing exactly what caused the mishap and teach you how to adjust your budget going forward!

These are things I personally recommend you do to reset your budget after a “bad month”:

1.    Identify The Areas/Categories

a.    To complete this first step, you should take a step back and analyze the exact areas or categories you are over budget in. You can complete this step by using “pen and paper” and reviewing your current budget, bank account and bank statements

b.   Once you have written out the areas or categories, you should assess the amounts you are over budget by. Then, you can compare your actuals vs the budgeted amounts for each category

2.    Assess The Reason

a.    This step is one of the most important steps to take when you are trying to reset your budget, because this is where you will assess the “why”

b.   Create a column next to each area or category you identified in Step 1 and write the reason why you were over budget in that specific area or category

c.    By assessing the “why”, you will be able to quickly identify if you had a one-off expense that you forgot about, that your budget is too low, or it can also be you had a tough week during the month that caused you to eat out more than normal. Whatever the reason is, knowing the “why” will be essential to help you with completing your budget reset

d.   In addition, you may realize that you have been too restrictive on certain categories and your budget simply does not reflect the true spending you are doing in each category. For this reason, you will then need to decide if you can afford to continue spending at the current amounts and simply adjust your budget, or if there are some lifestyle changes you need to make to spend less

3.    Recreate Your Budget

a.    You can complete this step at any time during the month or pay period you are budgeting for, once you’ve realized you need to complete a budget reset

b.   To recreate your budget, you can begin where you are now by evaluating how much money you have remaining and exactly which areas or categories you need to reassign money to. You can easily review your current bills before your next pay day and expenses that you must cover. This will assist you with establishing new amounts for each area or category

Always keep in mind that budgeting will not look the same each month. It is extremely important to complete check ins with your spending and compare it to your budgeted amounts to build consistency and understanding of your overall money habits!

Here are some additional budgeting blog posts:

 5 Steps To Begin Budgeting!

https://www.itsfinanciallywinning.com/blog/getstartedwithbudgeting

 You Can’t Budget Without These Budget Categories

https://www.itsfinanciallywinning.com/blog/importantbudgetcategories