Not many things are more frustrating than setting up a budget only to find that at the end of the month your financial expenses did not work out as planned. Even if the numbers show you operating in the red, you can use the information to make future changes in behavior. It is not a failure to miss budget goals, it is an opportunity for making improvements.

Let’s say for example that you budgeted $400 for food expenses during the month. Assuming that your original budgeted amount was adequate and feasible, an analysis of the bills can provide valuable detail to your spending patterns, and help you to gain insight on what might need some more attention. After adding up your receipts for actual food expenses you find that the actual amount spent was $550. Now is the time to dig deeper:

List the specific reasons you went over budget. Find all the items or events that caused the $150 difference and you may find that there are several different reasons. Was it eating out more meals than planned? A spur of the moment splurge on T-bone steaks for a holiday cookout for friends and family? Whatever the reason, by looking into the supporting receipts for details you can ferret out some important information that will help in future budgeting.

Look at spending patterns. Now that you have identified specific instances where your spending did not match the budget, look carefully for patterns that will emerge. Did you spend money to save time? Were any of your choices because of an inability to curb impulse spending or because you needed to project a certain image to someone? Assessing the patterns to the spending will help you to take steps to change them the next time the spending situations present themselves.

Develop alternatives for budget friendly choices the next time. For each reason that you listed, develop a way to counter this if it were to happen again. Perhaps some menu planning is in order or you need quick and easy recipes to get on the table at dinner time instead of choosing the drive thru or pizza delivery. Write down these alternatives and keep them in a place you can find them when the circumstances arise.

This process of analysis will take a little bit of time but you can gain very valuable information from it. During each step remind yourself that you are examining feedback and not casting blame for past spending. By gaining insight into your spending habits you’ll have the chance to respond differently when presented again with similar circumstances. By making little changes and practicing them until they become automatic, you will see yourself accomplishing your budget goals.

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Not all spending plans or budgets are created equal.  The idea is to find the one that is right for you.  The important thing is that you keep track of all your expenses because then you can begin to change your spending patterns.  A spending plan or budget calculator can help you put together a budget.  Here are some spending plan and budget calculators that we’ve found:

Spending Plan Online Calculator at Crown Financial Ministries.  With this calculator you enter your gross income, tithe, and tax, and a sample budget is generated for you.  This is the best calculator to use if you have never done a budget before and have no idea of your current expenses by category.  This calculator provides you with some recommendations by expense category and can be a good baseline to forming your budget.  The Crown Financial Ministries site is also full of good, solid, money management advice. 
 
Budget Calculator at Consumer Credit Counseling.   Income from each spouse as well as all expenses by category are entered into this budget calculator.  You can only use this one if you already have been tracking your expenses and know what they are by category (how much you spend on rent/mortage, food, auto, insurance, etc.)  A budget is generated which shows your actual spending versus the recommended budgeted amounts and shows the difference between the two.

Budget Calculator at CNN.com - Requires you to enter your income information and expenses by category.  Provides subtotals as well as recommendations for budgeted amounts.  

One important element in regard to your budget is to track all your spending.  We use Quicken software but there are many other ways to do this as well.  You can even just use a notebook or make a spreadsheet.  The important point is that you monitor your spending by category so you will know how much money you have spent in different areas.  How much do you spend on rent/mortgage, your food costs both in groceries and in dining out, insurance, etc.  Making your budget is just part of what you’ll need to do to manage your money; tracking your expenses is crucial to see where you can save more and spend less.   

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Now is a great time to review your 2006 expenses and make adjustments to your Budget/Spending Plan for 2007.  The way we do this is to use our Quicken Finance Program.  We run two reports and print them.  The first one is the 2006 Income/Expense Report.  This lists each category of income or expense for 2006 and is just a total for each category.  The second report is one for 2006 by itemized categories.  This breaks down each category of expenses by dollars actually spent.  We can easily review every expense and see where adjustments are needed, where we need to plan differently, and where we need to change our spending habits.  After we both sit down and review these reports, we then make decisions where the changes need to be made.  It is a good idea to review your budget more often when you are first starting out.  You may need to adjust your budget every month until it works the way you want.  We review our budget only a few times during the year and make adjustments where needed. 

When we ran our reports, the preliminary review shows that nearly every expense in our budget (except for our mortage which is a fixed rate) has increased.  We are going to be reviewing each of these increases to find out the reason (although most of them we already knew about) and brainstorming solutions to the increases. 

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