# How to Calculate Change in Budget Vs. Actual

by Mike Keenan ; Updated June 29, 2018Setting a budget for your investing expenses helps you plan for your costs. However, rarely do your budgeted amounts ever match up precisely with the actual costs. When measuring the deviation from the budgeted amount to the actual amount, you can measure the change as a percentage relative to the budgeted amount. This gives you a context for the significance of the difference. For example, if you go over budget by $1,000 and your budget is $500, that's a very significant change. However, if you budgeted $50,000, the difference is far less significant.

## Getting Started

If you're calculating this overage, you likely already know exactly where you went over. But review your budget just to be sure and highlight any areas where you exceeded your limit. You can then calculate your budget overages for each category, as well as for the overall amount. This can give you exactly what you need to compare future monthly budget results. You'll need to have your original budget, the amount you actually spent and a calculator to add up the differences.

## Calculate Overage

Start with the numbers in front of you. Subtract the budgeted amount from the actual amount to find the increase or decrease from the budgeted amount. For example, if you budgeted $1,200 for broker fees and you spent $1,340, subtract $1,200 from $1,340 to find you went over budget by $140.

Once you have that number, divide the amount by which the actual differed from the budget to find the rate of change. In this example, divide $140 by $1,200 to get 0.1167. Multiply the rate by 100 to find the percentage change from the budget to the actual. Completing this example, multiply 0.1167 by 100 to find you went over budget by 11.67 percent.

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## Move Forward

Now that you have the information, it's time to take action. If you see that you went over by more than 11 percent last month, you may want to take a look at the figures you chose originally. Should you increase your budget for that item? If so, it will mean cutting back in another area. If there's nowhere to cut, that means you'll have to find a way to reduce your spending in that category by 11 percent or more. Continue to monitor your budget and spending each month to make sure you're staying on track. Sometimes merely knowing you're going to do that calculation at the end of the month is enough to give you discipline.