Monitor Your Progress Monthly
As soon as possible after the end of each month, update your budget with your expenditures for the month. You can do this manually — by going through your checkbook, statements, and receipts — but consider using personal-finance software (see “Personal-Finance Software” at the end of this chapter) and perhaps online banking (see Chapter 4).
If you find you've exceeded your budget for the month, don't despair. Use it as a learning experience to improve your budgeting for the future. Your budget will get more refined every month and you'll get better and better at managing your money and working toward your goals. If you find after a month or two that tracking your expenses is too much work, consider combining some categories, such as miscellaneous household expenses or utilities, to reduce the record keeping, rather than giving up.
As you readjust the categories, look for areas where you can save small amounts of money. Small savings are easier to find and easier to implement than large ones, and small victories will give you a positive feeling about budgeting before you get into the tough stuff. Remember, the idea is not to deprive yourself, but to funnel as much of your money as possible toward the goals that are most important to you.
As your personal situation changes, reflect those changes in your budget. Examples of changes that should prompt an overhaul of your budget include the following factors:
Change in marital status
Change in family size
A new job
Salary increase (or decrease)
A new home
A major purchase that requires monthly payments