A Budget Stops You from Overspending

Checking in on your budget

Smart Money Tip: Don’t just set your budget and forget it

Budget is a noun—it’s a thing. But it’s also a verb because it should be something that you actively do every day. You need to review your budget regularly. Check in to make sure your spending is on track with the goals you set.

Assess your spending at the end of each month

At the end of each month, pull out your expense worksheet to see how you did. Total up your actual spending for each type of expense. Write it down on your worksheet next to the target you set.

Now, look at how those numbers compare. If you overspent on something, look back at your purchases. Were all of them necessary? Could have done something to avoid spending more than you wanted?

If you see that everything you spent was necessary, then you may need to adjust the target on that expense. If you do, make sure to total everything up and make sure you still spend less than you earn.

If you see that you overspent but that all the purchases you made weren’t necessary, then you have a decision to make. You can adjust the target now or wait a month to see if you can spend less next month to make the target.

Each month, repeat this process. If you see that you consistently overspend on something, don’t beat yourself up. Instead, find something else to give up so your budget remains balanced.

Explore tools that can make budgeting easier

These days, there are budgeting tools that make it much easier to keep a budget. Instead of writing everything down every month, there are apps that can track your spending as it happens.

Budgeting apps work by syncing with your accounts. Every time you make a purchase, it gets noted in a category. So, if you spend money in a clothing store, it notes it in your clothing budget category.

These apps let you set targets for how much you want to spend each month. Then they alert you when you get close to the target or go over it.

This makes budgeting hassle-free. So, find an app you like and use it!

But as you get older and get your own bank accounts, many banks also offer budgeting tools built into your account. If not, you can find apps on your smartphone or online that may offer different features you need.