Making a budget is often the first step in building a solid financial foundation. It helps you get better acquainted with how much money you earn, spend, and save. What’s more, it provides guidance and guardrails to help you hit the financial goals you’re focused on, whether that means saving for a vacation in Tuscany or the down payment for your dream house.
But budgets are not “set it and forget it” tools. The process can involve plenty of trial and error, and you may benefit from refining your plans along the way.
That’s where budgeting questions come in. The more often you check in with how your budget is going, the easier it becomes to tweak and stick with this key money management habit.
Knowing some of the most common budgeting questions to ask can help you fine-tune your financial plan so you can take control of your cash. Check out the list of questions below. When asked regularly, they can yield surprising insights and adjustments to enhance how you manage your money.
How Questions Can Help You Budget Better
Asking questions about budgeting can be a wise move because everyone’s financial situation is different. The way that your parents or best friends budget may be entirely different from the way you approach managing your money. By checking in and assessing where you stand, you can help improve your financial outlook.
The right budget questions can give you insight into things like:
• Why you should budget in the first place
• What you hope to achieve from keeping a budget
• Where your biggest budget pitfalls are
• How you can improve your budget
To put it another way, asking budgeting questions can help you better understand where you are financially, where you’d like to be, and how a budget can help you to get there.
In terms of how often you should be asking questions about budgeting, there’s no set rule of thumb. However, it’s a good idea to review your budget monthly to track any changes to your income or expenses.
An annual budget review can also help you see how your spending has evolved over the year. It’s also a good time to see what adjustments you might need to make as you set new financial goals for the year ahead.
14 Budgeting Questions That Can Help You
Not sure which budget questions to ask? The following checklist covers some of the most important things to consider as you make your monthly spending plan and keep tabs on it.
1. Am I Prepared for Unexpected Expenses?
Saving for financial emergencies is an important part of budgeting. When you don’t have money to cover an unexpected expense, you run the risk of having to use a high-interest credit card or loan to cover, say, a car repair or a major dental bill.
One of the first budget questions to consider is how much you have saved toward emergencies. If the answer is ‘0’ in liquid funds you could quickly tap, you may want to think about how much you need to save for emergencies and how to fit that savings goal into your budget each month.
2. What is a Good Amount for an Emergency Fund?
An often-cited goal for emergency savings is three to six months’ worth of expenses. However, a good amount for an emergency fund for you can depend on your income, expenses, and how much money you need to have in the bank to feel comfortable.
If you’re single and have side-hustle income on top of your regular paychecks from a job, for instance, you might be okay with one to two months’ worth of expenses saved. On the other hand, if you’re married with two kids and are the primary breadwinner, it’s a much different situation. You might be more at ease with nine to 12 months’ worth of expenses saved instead.
When you’re starting from zero, aiming for $500 or $1,000 can be a good way to ease into a savings habit. You can then review your budget monthly to see where you might be able to find additional money. Every little bit counts ($20 here, $35 there) until your emergency savings hits a level that allows you to breathe a sigh of relief.
Recommended: 6 Examples of When to Use Your Emergency Fund
3. How Much Debt Should I Pay Down Each Month?
Debt can make it difficult to reach your financial goals if a big chunk of your income is going to credit cards, student loans, or other debts. Generally, it’s recommended that no more than 36% of your monthly income should go to debt each month if you own a home, including your mortgage. If you rent, then your debts should be no more than 20% of your income each month, at least according to the Consumer Financial Protection Bureau.
The simplest answer to how much debt you should pay down each month is the maximum amount you’re able to pay, without cutting yourself short in other areas. The faster you can get rid of debt, the more money you can save in interest. And the more room you’ll have in your budget to fund other goals.
Quick Money Tip:Typically, checking accounts don’t earn interest. However, some accounts will pay you a bit and help your money grow. Opening an online bank account is more likely than brick-and-mortar banks to offer you the best rates.
4. Did I Overspend? If So, Where?
This is another great budgeting question to ask when reviewing your budget monthly if you’re trying to stop overspending. Going through each budget category and analyzing how much you spent can help you pinpoint the money leaks in your financial plan.
Once you find the leaks, you can take steps to plug them. For example, if you noticed that you’re spending more money on dining out, then planning meals at home and committing to that plan is a relatively simple fix. Or you might decide to audit your subscription services and cut out anything you’re paying for but not using. Those are simple ways to cut back on spending.
5. Do I Need to Adjust Spending Limits?
Reviewing your spending each month can help you figure out where you might be overdoing it. But it’s also an opportunity to see how inflation and rising prices might be affecting your expenses. If you notice that you’re spending more on groceries or gas, for instance, then you may need to trim other areas of spending to compensate for those higher costs.
You may also decide to adjust spending limits down if you want to dedicate more of your budget to saving or debt repayment. So again, instead of eating out you might stick to having meals at home which can be more cost-effective. If that saves you $100 a month, you could add that sum to your emergency fund or make an extra payment to your student loans.
6. What Are My Money Priorities?
Knowing your money priorities is important as they can influence the financial decisions you make. You could ask this budgeting question monthly. Too often? Aim to consider it at least once a year to see how life changes might affect your answers.
For example, your money priorities might include spending on travel or recreation in your 20s. But once you hit your 30s, your focus may shift to saving, paying down debt, and taking other steps to work toward financial stability.
Recommended: 5 Ways to Achieve Financial Security
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7. Am I Tracking Toward My Financial Goals?
Tracking your financial goals can give you motivation to stick with your money plan. It’s also an easy way to see how you’re progressing toward them.
Whether your goals include paying down debt, building an emergency fund, or saving for a vacation, you can ask this budget question monthly to gauge how you’re doing.
If you see that you’ve made little progress over the past few months, for instance, you can then ask yourself what you can do to change that and get closer to your goals.
8. Am I Happy About the Purchases I’ve Made?
Some things you have to spend money on, but others you buy because you want to. That’s the difference between needs vs. wants, and understanding that is an important part of budgeting.
If you find yourself spending money more often than you’d like on things that aren’t necessities, ask yourself what you’re getting from those purchases. Dropping $5,000 on a once-in-a-lifetime vacation might be justified if you get a chance to create lasting memories. Spending that same $5K on new clothes, on the other hand, might give you a temporary boost, but you may end up regretting that purchase later.
Considering what you’re getting from spending money can give you clarity on your financial priorities. It can also help you to identify bad money habits that might be hurting your financial situation.
9. What Would My Budget Look Like Without Debt?
Living debt-free might seem like a dream but it’s possible to make it a reality with the right plan. If you have debt that you’re paying down monthly, ask yourself what your budget might look like if you didn’t have to make those payments. That could give you a push to dedicate more money toward debt repayment so you can eliminate those obligations faster.
There are lots of debt reduction strategies you can use, including the debt snowball and debt avalanche techniques. If you’re tracking your debt repayment progress and aren’t getting ahead as fast as you’d like, you might review your budget to see if another method might be more effective.
When it comes to credit card debt, you might investigate balance transfer credit card offers, which give you, say, 18 months during which you pay no interest. This can help some people pay down the amount they own. You might also seek advice from a nonprofit credit counselor.
10. Is There a Way to Increase My Income?
Making more money can give your budget a boost. When income goes up, paying bills becomes less stressful. It may also be easier to knock out debt or grow your savings.
How often you ask yourself this budget question can depend on your situation, but it’s worth pondering it at least once a year. Some of the ways you might be able to increase income include getting a part-time job, taking on more hours at your current job, negotiating a raise, or starting a low-cost side hustle.
11. How Much Should I Budget for Investments?
Investing money and saving it are two different things. When you invest money, you’re putting it into the market where it has more opportunity to grow. There’s greater risk involved vs. saving, but the rewards can be greater as well.
The amount you should budget monthly for investing can depend on how much you have left after covering basic expenses, how much you’re saving for emergencies or other short-term goals, and how much you’re paying to debt. (You also want to spend a little on those “wants” mentioned above; otherwise, you’ll end up feeling deprived.)
Depending on the details of your situation, aiming to invest 10% might be a good place to start and you can build on that amount year over year as you pay down debt or increase your income. (Typically, experts recommend that 20% of your monthly after-tax dollars go towards savings; how you allocate that 20% between investments and other forms of savings is up to you.)
12. How Much Should I Save Each Month for Retirement?
Paying yourself first is a fundamental rule of personal finance and it’s a good way to build the wealth you need to retire. As you approach your budget monthly or yearly, consider how much you’re saving for retirement.
The exact amount you’ll need to save monthly will depend on your retirement goals and age. Financial experts often recommend saving 10% to 15% of income for retirement, for instance, though you might need to double or even triple that if you’d like to retire early or you’re getting a late start.
Look at what you’re putting into your 401(k) at work if you have one. If you’re not getting the full company match, then consider bumping up your contribution rate. And if your budget allows it, you might think about opening an Individual Retirement Account (IRA) to save even more for the future.
13. What Are My Goals This Month?
Financial goal-setting is something you can do for the long-term. For instance, you might want to save $50,000 for a down payment on a home or $1 million for retirement. But you can also set goals that you hope to achieve month to month.
For example, you might set a goal of getting three car insurance quotes from different companies if you’re hoping to get a better rate. Or you might have a goal of not spending money for 15 days out of the month. These kinds of short-term goals can help you move ahead financially without losing sight of your bigger money picture.
What’s more, succeeding at small financial goals can build your confidence to tackle larger ones.
14. How Can I Stay Consistent In Keeping My Budget?
Making a budget is important, but sticking to it matters even more. Examining your income and expenses monthly matters, but asking the key question, “How can I stay consistent with my budget?” can also be vital. Doing so can help you figure out what might be tripping you up and what you can do to be more consistent with your spending plan.
You might decide to do weekly or biweekly budget check-ins versus reviewing your budget once a month. Or you may ask a friend to be your accountability partner and help you stay on track with spending. Those kinds of things can help you get more comfortable with budgeting so that it’s easier to stay focused with spending month to month.
It’s common to have questions about budgeting, even if you’ve been in the habit of making a budget for a while. The great thing about making a budget is that there’s always room to tweak and improve things. Asking the right budget questions is a good way to figure out what’s working (and what’s not) so you can make the most of your money each month.
How many budget categories should I have?
There’s no single right answer to how many budget categories someone should have. It’s possible to have 100 budget categories or more, depending on how much detail you go into when dividing up your income and expenses. At a minimum, you may want to have a budget category for fixed expenses, another for discretionary expenses, one for variable expenses, a category for saving, and a category for debt.
What does a realistic budget look like?
A realistic budget takes into account all of your income and divides it up to pay for your needs (including debt repayment) and some wants, as well as allowing room for saving. It should allow you to manage your money without feeling stressed or anxious.
How do you plan a budget?
Planning a budget starts with understanding your income and then diving into your expenses. As you make your budget, you can assign income to each expense you have starting with the most important ones first. That usually means housing, utilities, food, transportation, and insurance. Paying down debt is also often a priority. From there, you can continue dividing up income to cover discretionary spending and savings.
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