Using Recordkeeping to Stick to a Budget

The number one reason that people fail to adhere to a budget is unreasonable expectations. The number two reason is that they simply just “don’t stick to their budget.” They forget. They lose track. They just don’t really do it in the first place.

Now, if you have put together a budget for yourself that can actually work based on your income and expenses, just not adhering to it is pretty much the most irresponsible thing you can do.

While there are many tools that will assist you with tracking your expenses and help you adhere to your budget over the long term, there is actually a very simple way that can be done by anyone with any technical background. You can use a notebook or spreadsheet that you update on a daily basis.

Whenever you make a purchase or pay a bill, put the receipt in a pile. (If you’re not at home, stuff the receipts in your pockets and drop them off in the pile when you get back.) At the end of each day, record the amount spent on each receipt in a notebook or on a spreadsheet. Write in what the receipt was for, what category of your budget the money came from, and why you made the purchase.

You’re not done yet, though.

You have to review your expenditures on a weekly basis. You need to track whether or not you’re meeting each category of your budget, and whether or not the budget needs to be reviewed or your spending habits need to be changed. If your spending habits are putting you out of your budget, at least you know through your records and will be able to make adjustments.

Every single week you need to make minor adjustments until the budget works. You need to try to make smaller purchases in areas where you’re going over budget. You need to prevent yourself from submitting to triggers that cause you to spend unnecessarily, which is why you record why you made each purchase. In fact, after only a few weeks of having a record of why you’ve made every purchase, you will begin to see patterns. And you may even become frustrated by some of your own purchasing habits.

This entire process can be handled in a few minutes per day with an additional few minutes once per week, and it is often the difference between a stable financial plan or living paycheck to paycheck.

Any budget that doesn’t suffer from unreasonable expectations can be used to help you achieve your goals - it just needs to be adhered to for it to work. If your plan doesn’t give you the money you require for you to live a full and happy life, you either need to adjust your expenses or increase your income. But if you track your budget actively with only a few minutes every single day, you will be able to see what you need to do to make your budget work.