When I say the word “budget,” some of you may cringe and want to close this browser and go about your day. However, I encourage you to keep reading because budgets aren’t bad, restrictive, or oppressive. Budgets, which I like to call your financial blueprint, are designed to help you have a framework of what you can do. Just like an architect would never build a structure without a blueprint, you should not manage your finances without a plan. This plan will help you:
- Design a life you can love without debt by reducing or eliminating overspending
- Pay bills in full and on time which will save you money and reduce your stress
- Make progress towards your financial goals which increases your financial security
- Provides a framework for you to do more of what you love and what you want to do
- Puts you in a position to better respond to emergencies without going into debt, borrowing money from friends/family, using a credit card, or going without
- Puts you more in control of your spending and allows you to live a fuller life with less stress
- Honor God
Also, most of us want God to bless us financially and provide for us so that all of our needs are met plus extra. But in making this request, we must do our part and appropriately manage what He has already given us, which means that we are good stewards of our money. Think of it this way. If you child didn’t respect the curfew, would you allow your child to have more flexibility, responsibility, or privileges? The same concept is true with your money management. However, I want to be clear that managing what we have wisely does not guarantee that we will be rich. What is does mean is that we will be more grateful, make our resources stretch more, have less stress, and have more joy and peace of mind.
The below scripture from 1 Peter tells us just how important good stewardship is.
Be shepherds of God’s flock that is under your care, watching over them – not because you must, but because you are willing, as God wants you to be; not pursuing dishonest gain, but eager to serve; not lording it over those entrusted to you, but being examples to the flock.” 1 Peter 5:2-3
Although Peter was specifically talking to the elders in the church about taking care of the church body, the same concept can be used to guide money management. Just as elders have a responsibility to be good shepherds of the church flock, we have a responsibility to manage the resources that God has given us. Proverbs 21:5 tells us, “The plans of the diligent lead to profit as surely as haste leads to poverty. A budget is the plan and provides the starting point for creating a solid financial structure.
As you can see a budget can allow you to do so much and can give you peace of mind. However, that doesn’t happen automatically. It comes with hard work, discipline, and attention to detail. The end of each month is a great time to review your budget and assess how well you followed it. This will allow you to track and monitor your progress, respond to financial challenges within a reasonable time, and increase the likelihood that you will maintain and even grow your progress.
To help guide you monthly budget audit, ask yourself the 5 questions below at the end of each month to assess your progress and ensure that you are following your financial plan.
Question 1: Did I follow my budget?
This question is huge!! Creating a budget can be challenging, but following it is no joke! Therefore, kudos to you if you were able to follow it or even kind of follow it. That is half the battle.
There are two parts to this question. The first part is asking whether you were able to follow the budget as it was created, meaning that you adhered to how you allocated your financial categories. The second part, which we will discuss in Question 3, assesses whether or not you moved money between categories to ensure that you did not overspend.
If you found that you had challenges following your budget and that you did overspend, then first things first: Congratulate yourself for trying, forgive yourself for overspending, commit yourself to starting over next month, and then assess your overdraft fees. When you assess your overdraft fees, analyze the following:
Total up the amount of money that you spent in overdraft fees and extended overdraft fees if applicable
Assess the transactions that caused the fees and add the overdraft charges to those transactions. Was it worth it to pay that price for the item? For example, if you went to Panera for lunch and it triggered an overdraft fee, then the $7 sandwich really just cost you $42 once you add in a $35 overdraft fee! How many meals could you have purchased for $42?
Understand the context of the charges. Did the overdraft charges stem from an emergency that came up that needed to be taken care of? Was it due to overspending in another area that threw the budget off? Was it due to an impulse purchase? Was it caused by a transaction that cleared late and your available balance was less than what you saw in your online banking? Knowing what caused the overspending will help you to make modifications next month.
Question 2: Did I pay all of my bills on time and in full?
The goal is to pay all of your bills on time, in full, every month. This is possible because you would have allocated the money to those bills so no more accidentally spending your bill money or running out of money and not having anything left to pay bills! This, however, assumes that you did not experience an economic shock, financial setback, or a surprise (and unavoidable) essential expense that could not be covered with savings.
At the conclusion of each month, review all of your monthly expenses and assess whether or not you paid them on time. If you paid any bills late, then indicate which bills were late, by how many days, and why.
If you didn’t pay your bills in full and on time, then don’t avoid the utility company (or whatever company it is – my frequent late payment used to be the utility company). Call them to make payment arrangements to pay it off over time. Then, once you do that, make sure that you adjust your budget going forward by adding the incremental amount to the budgets in the subsequent months.
Question 3: How was the process of following the budget?
I always encourage people to do some sort of reflection to make sure they constantly assess whether they are making progress to their goals, to evaluate opportunities to improve and to find gratitude. Therefore, I encourage you to also apply this practice to understanding the process of your monthly budgeting. This is extremely important if you are newer to budgeting or you are trying to create a habit of reviewing your finances. As you reflect on the process of creating the budget, there are a few questions to ask yourself:
- What did I do well this month?
- Were there any areas in my budget that were more challenging than others to adhere to?
- Did I move money between categories to accommodate an unbudgeted increase in spending in another category?
- How did the process of budgeting and following the budget feel?
- How can I better make my budget fit my needs and my family’s needs?
I don’t want you to get overwhelmed and think that you need to spend a ton of time in reflection. The key is to use these 5 questions as a guide to determine what works and what doesn’t and then use that information to improve your financial blueprint and the habits needed to follow it.
Question 4: Is there anything that I want to adjust for the next month?
After responding to the questions in Question 3, you may decide that you need to make some changes to your plan and that is okay. Remember, it’s about finding what works for you and your family. Just to show you how important this is, I wanted to provide you with a few examples:
- If every month you find yourself struggling to work within your food budget, then maybe you can reduce other areas in your budget so you can allocate more money to the food category.
- My pre-kids budget no longer worked for my life as a mom, so I had to go back to the drawing board to develop something that accounted for the increase in spending for my children.
- Even if I look at my budget since motherhood, my budget changed again once I no longer needed to supplement with formula. When this part of the expenses for the children decreased, I was able to reallocate that money to other areas.
Therefore, if something in the budget isn’t working then feel free to change it and re-adjust the spending categories as you need to until you find something that works for you and your family. Don’t stress yourself out, quit, or feel like a failure when you have the power to make the change. Budgeting is an iterative process and your financial blueprint can change as your life changes. Just keep going.
Check out the budget auditing worksheet to help you evaluate your spending decisions and budget.
Question 5: How much closer am I to achieving my goals?
This one is extremely important because if you don’t pay attention to and monitor your progress towards your goals, then you can easily forget about them as you focus on day-to-day living. That’s why vision boards and goal note cards are so popular. They constantly remind you of what you are working toward and why you are making the hard decisions and sacrifices now. For me this means, having financial freedom; living a life that honors God; and saying, “yes” to children, my God, and myself more than I say “no.”
As you assess your progress to your goals you want to understand:
- How much did I contribute to my financial goals this month?
- What is my new balance?
- Was this more than, less than, or on track with what I planned? If there was a difference then understand why.
If setting aside money towards your goals was difficult, then go back and review why you set them to find the encouragement to keep on going. Check out this post and this interview to help you go back and set goals. Also, if the estimated savings amount was too high and effectively unrealistic, then go back and see if something needs to change. Don’t create an excuse to skip out on saving. Rather, before you adjust your savings, take the time to examine if there are some spending categories that you can reduce or habit changes that you may need to make first. Remember, the key is not to create stress. This process is supposed to help you to relieve stress and set you and your family up for success.
This may seem like a lot of work at the end of each month, but going through this process will help you to fine-tune your spending and put you in a better financial position going forward. Another benefit is that your children will get to see how seriously you take financial stewardship and that will teach them good money habits. In order to complete your monthly budget audit, create an appointment with yourself where you will review your budget (your financial blueprint) at the end of the month. Make that commitment to yourself, because you deserve a phenomenal life and so do your children. Practicing good financial stewardship is part of the process.
For even more information on developing your budget as a single mom, then check out this interview here where I walk you through the process.
Leave a comment in the Phenomenal Moms Facebook Group to let me know how this helps you!
Aisha Taylor is a single mom of twins, personal financial coach, work from home entrepreneur, and #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle.” Aisha has been featured in ESSENCE, Jet Magazine, and Black Enterprise. She is also the Founder of FNPhenomenal (Frugal –n- Phenomenal), a movement designed to help single moms create a vision for their lives, craft a financial strategy to support that vision, and show them that phenomenal living is possible. It’s time for you to be Financially Phenomenal!