Updated: Nov 6
If you just cringed when you read the word "budget", you're not alone.
Many people feel that budgets are hard to follow or just don't work for them. The truth is, there's a crucial step that is missing for most budgets.
If you are currently using a budget template that only allows the input of your budgeted expenses then that is a great first step. However, this is only half the work.
The second missing step is to go back and compare your theoretical budget to what you actually spent. Think of this step as a Budget Retrospective.
A retrospective is defined as the act of looking back on or dealing with past events or situations.
If you've created a budget for a month and that month has been completed, we must look back to see how close (or straight up in denial) we were to spending the same amount that we budgeted for.
Unless it's a fixed expense, such as a rent/mortgage or a car note, then there's a good chance that there is a discrepancy between what we think we spend and what we actually spend. The act of retrospecting your budget will allow you to make adjustments to the next budget so that you aren't repeating the same mistakes and aren't left feeling like you're going in circles and that budget are hopeless.
Click the button below to get a Free Budget Template which includes the "oh so important" retrospective step of comparing your budgeted amount to the actual spend amount.
Let's Talk Semantics
No doubt, the word "budget" gets a bad rep. Is it that we associate "budget" with terms like restrictive, cutting back, or boring? In reality, it shouldn't be this way.
This is why I started to use the term Spending Plan with my 1:1 clients. There's just a more positive connotation there. Your Spending Plan is there to direct your dollars on what to do based on your life and responsibilities and not as a restrictive tool.