Budget review

What It Means

A budgetBudgetA plan for a set period, usually a month, that lists the money you expect to receive and how you'll spend or save it. See more review is the regular sit-down where you compare what you planned to earn and spend with what actually happened, then adjust the plan. It catches categories that keep running over, costs you forgot, and income that changed. A budget nobody checks stops describing your real spending, and a CFPB study found that even people who keep a budget often don't compare their spending against it very often.

How It Sounds at Home

• "Let's sit down and go over the budget Sunday."
• "We blew the grocery line again."
• "That number was never realistic, let's change it."

The Breakdown

A short example. Dana and Kofi build a careful budget in January, with $650 a month for groceries. They don't look at it again until April. When they finally do, groceries have run $120 over every month, and they've covered the gap by pulling $360 out of savings without quite deciding to.

Where it goes wrong. The plan wasn't the problem; nobody checked it. A monthly look in February would have shown the overrun after one month, while they could still choose between spending less on food and raising the grocery line by trimming something else. Instead, savings quietly paid for it.

What a review covers

1. Gather the month's statements and receipts and total what you spent in each category.
2. Compare each total with the plan, and note what ran over or under.
3. Mark the costs that are the same every month, which the CFPB's spending tracker says are often needs, and look for wants you could cut.
4. Check income: a raise, fewer hours or a new job means the plan needs updating.
5. Change any line that runs over every month so it matches real life, and take the difference from somewhere else.

How often. Buhata's suggestion: a five-minute look at receipts each week, a full review once a month, and an extra one whenever your job, rent or household changes.

Good to Know

The CFPB's spending tracker suggests tracking a whole month rather than a week or two, because small purchases add up and don't always match your priorities. Its budgeting guidance adds a weekly look at your receipts and an update to the budget whenever your job or spending habits change. The CFPB also publishes a free monthly budget tool for listing income and expenses, and Buhata's budget varianceBudget varianceThe gap between what a budget planned and what actually happened, in dollars and as a percent of the plan, marked favorable or unfavorable. See more page explains how to read an over or under number.

Related Terms and Categories

• Budget

  A plan for a set period, usually a month, that lists the money you expect to receive and how you'll spend or save it.

• Budget variance

  The gap between what a budget planned and what actually happened, in dollars and as a percent of the plan, marked favorable or unfavorable.

• Expense tracking

  Writing down every purchase and bill as it happens, by category, so you can see where your money actually goes and compare it with your budget.

• Subscription audit

  Going through every recurring charge you pay, adding up what each costs a year, and canceling the ones you no longer use.

Household money and budgeting