How to monitor your personal budget: 12 helpful tips

The ultimate guide to budgeting

• How to monitor your personal budget: 12 helpful tips
• How to create a personal budget in 5 steps
• Is there a good time to create a personal budget?
• Features of a good personal budget
• Introduction to budgets: Why you need a personal budget

You have made a plan by creating your budget, it’s execution time. How do you monitor your personal budget to stay on target?. This is the tricky aspect of budgeting. Most people set budgets but don’t follow it. There is no point in setting a budget that is subsequently ignored. No doubt we don’t meet our desired targets sometimes. which is why it’s important to consider the aspects of budgeting in my previous post, features of a personal budget to ensure you are not setting yourself up to fail. Here are a few tips that would help you stay on track with your budget

1. Review your budget regularly

Set up a system of regular checks on your budget. If you use a budgeting app you will get prompts and reminders. You can also set reminders in your calendar or have regular catch up with your partner if you have one on progress. Managing your budget is active and not a passive activity. It doesn’t need to be tedious which is why the tool and approach you use is as important as setting the budget itself.

2. Cashflow

Be mindful of your cash flow, is it regular or irregular? A regular income and expenditure mean you can have things automated and organised. If your income or expenditure does not come in monthly at the same time then you have an irregular cash flow pattern. This applies especially to people who are self-employed, contractors, and small business holders. It could be that income is regular but your pattern of expenditure isn’t. For instance in Nigeria where I grew up, rent is usually demanded on an annual basis. If you receive income monthly and have annual expenditure, you can save the monthly equivalent in pots. Create a pot (can be a separate bank account) and transfer the monthly equivalent into that pot so that when the time comes to pay the annual bill the money is there and waiting.

3. Use the envelope system

Apart from using pots, you can also use the envelope system. This is particularly useful when you are struggling to meet spending targets. For example, you take out the cash budgeted for groceries and put it in an envelope labeled groceries. Then take only the cash you need to the grocery store and leave your cards at home. This means you only spend what you have in your envelope and helps you stay disciplined. Here’s a post from Dave Ramsey’s website explaining the envelope system in detail.

4. Budget approach

Remember to choose a budget approach that works best for your situation. For instance, if your savings and investment goal is a top priority, choosing an approach where your savings is taken out first and moved to a savings/investment account means that you have instantly met your goals. Your focus will be on how to manage your spending. This is better than trying to meet spending goals so that you have money left to save.

5. Automation

Automation is one of the things to consider for monitoring your personal budget especially when you have a regular cashflow. Automate as many bills as you can. Some companies offer you a discount if you set up a direct debit and you can organise this for the first of the month or whatever date fits your income cycle. I have a bill that comes out on the 25th of the month. It throws me every time because I usually have forgotten about it and my funds are at the lowest. I am considering moving this as well to align with my other bills. This way once the fixed bills are out of the way what is usually left are the variables and discretionary spending. That way I have fewer pots of money to monitor. Using an app for your budgeting is also a good way to use automation.

6. Be creative with your spending

When meeting your spending goals proves difficult, you need some will power and creativity to get by. The saying “Where there is a will there’s a way”, becomes so relevant. For instance, cross-subsidy is a commonly used word in the industry I work at and I practice this in real life. So, I sometimes underspend in one expenditure category in other to cover an overspend on another because there are things I find easier to do without. The focus is on meeting my goals. Some examples of ways to be creative with your spending include; planning your meals to include more vegetables and less meat, planning a lot of local fun activities for your family instead of an expensive holiday. In what ways are you being creative?

7. Discipline

Discipline is the key to how to monitor your personal budget. It underpins everything. You can create a budget and learn a ton of tricks, but without the will power to actually do it, it will be all meaningless. One of the dictionary’s (Oxford) meanings of discipline is self-control. On the journey to financial freedom and increasing your value, a lot of discipline of self is required. The discipline and consistency of tracking your spending to ensure you are on track, the discipline to delay gratification, and not keep up with the Joneses. Also, keeping your goals in focus requires discipline. How do you stay disciplined? Share your tips in the comment section below.

8. Know yourself

This is the one instance when the phrase “to thyself be true” might not apply especially when your true self strives on retail therapy to get by. Set yourself up for success by finding ways or habits that help you meet your budget. This also means recognising your weaknesses and finding ways to turn them into strengths.

9. Lifestyle

Are you struggling to save or meet spending targets? Do a self-assessment of your current lifestyle. What do you really need? I think we have all learned in this pandemic year that you can do life without a lot of the things we are used to. Can you make some adjustments?

10. Check your relationships

This may sound out of place in a ‘how to monitor your personal budget’ post but it is very important. Do you have friends or relationships that mock or ridicule your effort at keeping to your plan? Do the people around you encourage or assist you with your goals or set you back a great deal?

11. Use delayed gratification strategies

When you want to go over your budget to spend on something unplanned, check if it can wait for another month or longer. Maybe you don’t even really need it. Adverts are done to make viewers feel that they are not complete without the products being advertised. However, most times if it is not as urgent then delay it.

12. Focus on your goal

Budgeting should not be tedious or gloomy or even considered as punishment. It’s a mind over matter thing. If you view it as positive and the key to you achieving the lifestyle you want in the future, it will be a more positive experience. I hope this post on how to monitor your personal budget and the 12 tips will help you on your budgeting journey and meeting financial goals. See a summary of the key takeaways below:

• Remember your goals
• Reward yourself and celebrate small wins
• Form your own delayed gratification tactics
• Put structures in place that help you succeed

In summary, budgeting is not the end in itself, it is a means to an end. The end is your financial goal. Whether it is stability, independence, retirement, wealth creation, I wish you all well on your journey. It has been wonderful writing this budgeting series and I hope to summarise it all in an e-book. Please remember to comment and share.