One of the keys to financial success in life is the ability to set a budget and then adhere to it; however, the only way to know if you are indeed following it, is to do an analysis of your income and expenses each month to ensure you are not overspending. A budget analysis is a good way to look at your spending habits and determine how well you are managing your money. Performing this analysis on a monthly basis will give you a good view of your money managing capabilities.
Write out your monthly budget numbers with their categories on a piece of paper or type them into a spreadsheet computer program.
Gather all receipts and bank records, which will show you all the deposits and expenses for the month. Organize them by category. For example, you would combine all of the receipts associated with your car into the "Vehicle" category.
Total up the income and expenses for each budget category. Write the actual totals next to the budget total numbers for each category.
Calculate the difference between the actual income and expense totals and your budget numbers for each category. Write the differences next to the actual amounts. For income, a positive number is good, as this shows there was more money coming in than expected. For expenses, a negative number is good because this shows that there was less money spent than was budgeted for.
Subtract the expenses from the income for both the budget and actual numbers. This will give you the total amount of money for what you should have and what you actually have at the end of the month. Then calculate the difference between these final numbers to determine if you have spent too much overall. If this number is positive, you were under budget and you will have more money left over at the end of the month than you thought you would.
Analyze these figures over the course of a few months to determine your spending habits. Adjust your budget accordingly.
- Analyze these figures over the course of a few months to determine your spending habits. Adjust your budget accordingly.
Based in California, Daniel Zisko has been a writer since 2008, penning articles for a variety of online publications. Before he started a writing career, he spent several years traveling and working as a hotel manager for several different hotel properties. Zisko holds a bachelor's degree in accounting from National University with a minor in biology.