Note: This article is for educational purposes only. It should not be considered as investment or personal finance advice.
The best intentions are always present when creating and following a budget, yet somehow there is always a discrepancy or several, that result in it never balancing as intended. However, if you are truly serious about making financial progress and have made genuine efforts in following a budget and have had little success, there may be another step you need to take to identify where your funds are being spent.
The best way to initiate such a lifestyle change is to commit to your budget. Every financial transaction, no matter how small, should be tracked. Designate a folder or binder to keep all paper receipts. Online transactions must also be tracked. You can create a folder on your phone, personal device or computer to track your online purchases. If you have enrolled in online banking, you can use that services to track expenses.
Track your expenses, down to the penny. At the end of the month, summarize your expenditures. Categorizing your expenses by type. Then determine where your expenses were not in alignment with your budget. If actual expenses were higher than your budget, ask yourself “Why?” You may have had an unexpected expense, such as a car repair.
However, if your expenses were higher due to poor spending habits, you should reevaluate how and where you spend your funds and make adjustments to reduce expenditures. Staying in line with your budget will allow you to not only reduce your expenses but to save for investing or making a major purchase, such as a house. Knowing exactly what factors you are working with and how you must revise your approach to your finances is a very powerful tool to ensure success in your financial goals.