Budget Divas

Smart Money Habits Series Pt 2: Reconciling Your Budget The Easy Way

March 25, 2023 Episode 60
Budget Divas
Smart Money Habits Series Pt 2: Reconciling Your Budget The Easy Way
Show Notes Transcript

Ep #60: In the last episode, we talked about setting up the foundations for reconciling your budget and I would highly encourage you to listen to that episode then jump into this one. 

Reconciling my budget hasn’t always been my strongpoint because it takes time to plan and to actually sit down, look at my receipts, and cross-check every dollar that was spent with my budget. Even though I’ve been doing this for years, it’s still one more thing that I need to do on that never-ending to-do list. 

Last year was a really busy year for us. Alden and I were juggling our businesses, our 9-5 jobs, and picking up extra side hustle work where we could because we were saving for a bigger place. In the busyness of it all, some things that to give in order to make space for another. I heard this analogy from one of my coaches – it’s like you have 16 pots and only 4 burners on the stove. You are trying to fit all 16 pots on the stove but there is no place for it, except for 4 of them. So you have to decide which 4 are going on the stove first, then second, and so on. And this is exactly what we were doing with our time last year. We were so busy with work that something had to give. And the #1 way that I ruin my budget is eating out. Can you relate to that? Even though we can’t see each other, nod your head and smile if you can relate to this. 

I honestly love to eat out. Whether it’s sushi, thai food, or a good steak…. Dining out at restaurants is my favorite way to reward myself but it’s also my biggest budget buster AND last year because we were so busy, we were eating out all the time. Now, I am not opposed to eating out if it’s in my budget and planned but last year (especially in the summer and during the holidays when my son was home from college) we ate out a lot. On top of that, we also bought a ton of groceries thinking that I would cook at home. It was definitely a double-whammy. So the extra side hustle money that we were earning to go towards our savings ended up going to our grocery and dining out categories. 

This is the reason why I’m so passionate about reconciling the budget. When you reconcile on a weekly basis, you know how much money have left to spend for the following week. If you’re not one who loves to meal plan or eat the same thing everyday, adjust your budget accordingly to allow more money towards your dining out category, so as long as it is within the means of your budget. 

This is really where the magic happens when you reconcile your budget. You can evaluate your spending habits and see where exactly your money is being spent. 

Now that you understand why it’s so important to reconcile your budget, here are the action steps to take to do exactly that so you’ll always be living within your means, have savings tucked away for a rainy day, and be able to pay off debt faster than you can imagine. 

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Welcome to another episode of the Budget Divas podcast. I am your host Jenn Trinidad and I am excited to be back with you as we continue the conversation on how to reconcile your budget. In the last episode, we talked about setting up the foundations for reconciling your budget and I would highly encourage you to listen to that episode then jump into this one. 

Reconciling my budget hasn’t always been my strongpoint because it takes time to plan and to actually sit down, look at my receipts, and cross-check every dollar that was spent with my budget. Even though I’ve been doing this for years, it’s still one more thing that I need to do on that never-ending to-do list. 

Last year was a really busy year for us. Alden and I were juggling our businesses, our 9-5 jobs, and picking up extra side hustle work where we could because we were saving for a bigger place. In the busyness of it all, some things that to give in order to make space for another. I heard this analogy from one of my coaches – it’s like you have 16 pots and only 4 burners on the stove. You are trying to fit all 16 pots on the stove but there is no place for it, except for 4 of them. So you have to decide which 4 are going on the stove first, then second, and so on. And this is exactly what we were doing with our time last year. We were so busy with work that something had to give. And the #1 way that I ruin my budget is eating out. Can you relate to that? Even though we can’t see each other, nod your head and smile if you can relate to this. 

I honestly love to eat out. Whether it’s sushi, thai food, or a good steak…. Dining out at restaurants is my favorite way to reward myself but it’s also my biggest budget buster AND last year because we were so busy, we were eating out all the time. Now, I am not opposed to eating out if it’s in my budget and planned but last year (especially in the summer and during the holidays when my son was home from college) we ate out a lot. On top of that, we also bought a ton of groceries thinking that I would cook at home. It was definitely a double-whammy. So the extra side hustle money that we were earning to go towards our savings ended up going to our grocery and dining out categories. 

And this is the reason why I’m so passionate about reconciling the budget. When you reconcile on a weekly basis, you know how much money have left to spend for the following week. If you’re not one who loves to meal plan or eat the same thing everyday, adjust your budget accordingly to allow more money towards your dining out category, so as long as it is within the means of your budget. 

I was talking to one of my private clients yesterday and she told me it’s actually cheaper for her and her husband to eat out than to cook at home. And I loved that response because it makes her happy, saves her time, and saves her money. So I asked her if you could eat the same thing every single day what would it be? And she said you know right now I really love Panda Express’s mushroom chicken. As she was talking about this, her face lit up with a huge smile on her face. Her plan is to allow more money towards her dining out category than groceries so she has that good balance. 

This is really where the magic happens when you reconcile your budget. You can evaluate your spending habits and see where exactly your money is being spent. Another member in Budget Divas loves to travel. In the past year, she traveled around the US, went to Japan, and to Israel. When she evaluates her budget, she wants to spend less money on groceries so she can allocate that money towards a future trip. In fact, she’s planning to RV this year or next year … which I’m super jealous because that is one of my long-term goals. 

So anyway, back to reconciling your budget. Now that you understand why it’s so important to reconcile your budget, here are the action steps to take to do exactly that so you’ll always be living within your means, have savings tucked away for a rainy day, and be able to pay off debt faster than you can imagine. 

1.       The first step is to gather your receipts for the current month. In the last episode, we talked about collecting all your receipts and putting it in a dedicated space whether that’s a drawer, a container, or a box. Now we need to reconcile those receipts with our budget. Let’s say you budgeted $300 for dining out this month and it’s the second week of the month. Going through your receipts, you spent $50 on restaurant one and $30 on restaurant two for a total of $80. So looking at your budget, you know that you have $220 left over to spend on dining out for the remainder of the month. 

 

Now let’s say you after you added up your dining out receipts, it totals to $280 for the month. You have $20 leftover to spend for dining out. But you just remembered that your friend is coming into town next week and it will probably cost you $40 for your portion of dinner, drinks and maybe a dessert. You’ll be over $20 putting your budget into the negative. So you have two options. Either find an extra $20 in your budget to allocate towards your dining out category or make an extra $20 through your side hustle (and by the way, this is super easy to do if you’re a mystery shopper … as some companies pay weekly). Clearly you can see that reconciling your budget is a strategy that is black and white. You either have the money or you don’t. It’s in these decisions that gives you the power to make sure that you don’t go over budget but also the freedom to either make more money to cover that extra $20 or to move it from one category to another. 

 

What I mean when I say moving it from one category to another is let’s say you have $500 left for groceries. But looking at your inventory list with all the items you have in your pantry, freezer, and fridge you have enough food to make meals for your family so you can actually take that $20 from your grocery budget and put it towards dining out. 

 

A word of caution here – I wouldn’t recommend stealing from one category to another on a regular basis because it can get confusing after a while. But as you continue to work on your budget month to month, you’ll get a good feel of how much to budget for each category. I used to only budget $50 for personal spending money until I realized I was going over every single month and had to constantly move money around in my budget to balance it out. So for the upcoming month, I increased it to amount that was within reason and something that I could stick with and rarely do I go over because I know how much I need to budget for. 

 

When I think of reconciling budgets, I have this picture in my head of old tv shows where the couple is at the dining table with a calculator and huge mounds of receipts all over the table and wanting to pull their hair out. If this same picture comes to mind, here are your action steps to do right now, right after you listen to this episode. 

 

1.       Gather your receipts and input the information in your budget app, paper template, excel spreadsheet – whichever method you use. The first time you do this might be madness but if you stick to a weekly schedule, it will get easier and you’ll have less receipts to input. 

2.       Look at how much you have left in that budgeting category and if you are over budget, you’ll need to move money from another category in order to balance OR you can take on additional work through a side hustle to make up the difference. This can also be selling things as well – perhaps you have items you’re willing to part with and can place it on FB marketplace or wherever you sell items. 

3.       Evaluate your budget. Is one category too high or too low? Would you rather buy less groceries so you can eat out more? Does it make sense to do it this way if it saves you money? 

 

Doing these steps does take time and work, but it will get easier. Here’s the cool thing too. When you start doing this on a regular basis, you’ll start to see that you go to the store less often. Because it’s a pain to enter 20 entries in your grocery category. Instead, it helps you to plan for your grocery outing by making a grocery list so you have just one or two entries per week. 

I hope you have found these tips helpful and I’d love for you to attend my free training: How to take control of your money without pinching pennies that is happening next week Wednesday, 3/29 or 4/5. This is going to be a live training over Zoom. I would love to meet you there and let’s have a conversation through the Q&A portion after the training on these tips. Always happy to hear from you. Click the link below in the show notes, find it on my website at budgetdivas.com or you can also find the link in my bio on Instagram. 

Alright friends until next time, keep moving forward one step at a time.