3 Things to Do to Trust Your Budget

February 6, 2023

Who remembers playing Monopoly? The thrills of buying Park Avenue, then collecting rent from your siblings are one of childhood’s delights. Sugared cereal is another, but I digress.

Watching your portfolio of properties and cash grow is something even a 5 year old can grasp as exciting. 

And as an adult it’s still fun, but it can be easy to sometimes wish the Monopoly money could be converted to the real live stuff—it could be pretty helpful.

There’s a world of difference in the real world, though, between the pastel paper stuff and the minted money. Only one is accepted as legal tender and buys you stuff. The other? No such luck.

But if you told your budget you had $2,000 of Monopoly money your budget would just think “sweet!” 

Some clients worry when they start budgeting that they can’t trust their budget.  It doesn’t feel “real” at first. After a long chapter of reactivity and overwhelm, it feels too good to be true that you do actually have $100 safely budgeted for clothing.

Before proceeding, let's make just one quick point of clarification: your budget doesn’t say how much money you have for various purposes. You do.

You told it how much you wanted to plan for that purpose, then entered your spending.

The ol’ budget is simply doing math to tell you how much remains. It’s a subtle but important distinction for you to remember that you are in charge!

So if you find yourself wondering whether you can trust your budget, here are the things you do so you can. These 3 behaviors are of course related and function like 3 pillars of a solid budgeting foundation.

1. Reconcile

You reconcile your budget to your bank account often to make sure you’re not pretending like you have more money than you really do. 

Reconciling is the act of making sure the pile of money that you’ve organized in your budget matches the pile of money your bank says you have. The bank doesn’t lie.

But it is totally possible for you to tell your budgeting tool that you have thousands of dollars more than you really do. If you never reconciled to your bank, your budgeting app would never know there was a difference.

You, however, would know when you eventually start trying to spend money you don’t have. 

It’s critical to reconcile to the source of truth—your bank account—often. I'd suggest at least weekly, particularly if you don't have your budget synced to your accounts, or if you find that there's a bit of lag in the sync.

2. Stay in touch

You stay in close contact with your budget. This looks like:

  • Making sure you give each of your received dollars a job.
  • Entering spending often (daily or every other day)

Why is this important? In conjunction with the other pillars, it just makes sure you've got a plan for your dollars, and that you are using current numbers as you work your plan.

For example, if you spend $80 on eating out on a Saturday but don’t enter it or import it in your budgeting app until Friday, you could look at your Dining Out category and think you have $80 more for it than you really do.

3. Fix mistakes frequently

Make sure to clean up overspending when it happens. When, not if. Even as a budgeting pro, I still overspend sometimes!

In the budgeting tool* I personally use and my clients find they love, red categories mean you’ve spent more money from your bank account than you had set aside for this purpose.

Yellow categories indicate either that you’ve overspent on a credit card OR you have a goal/scheduled transaction and don’t have enough money set aside for it yet.

If you’re familiar with end-of-month damage control, this will be a very welcome change. You know what I’m talking about—you start the month with good intentions, overspend a bit here and a lot there and a bit there and so on, and have a big mess to clean up at the end.

Taking care of overspending frequently keeps your mess from becoming unsolvable and stressful at the end of the month!

That’s it, the 3 things you do to make sure you can trust your numbers. Like mentioned, they form the pillars of your budgeting foundation, and your money and life is better with them. 

Think about eating healthy, exercising, doing the dishes and similar.

Because your health and home environment matter, you put some daily effort toward these things.

The act of and the results of budgeting will be way more pleasant and helpful if you put similar effort toward it, and make sure that effort includes these three components.

Because when you do, you can trust that you are winning at the real-life Monopoly game and spend with confidence.

*You Need A Budget (or YNAB).

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