- Budgeting
- Cash Management
- Consumer and Mortgage Loans
- Debt and Debt Reduction
- Time Value of Money 1: Present and Future Value
- Time Value of Money 2: Inflation, Real Returns, Annuities, and Amortized Loans
- Insurance 1: Basics
- Insurance 2: Life Insurance
- Insurance 3: Health, Long-term Care, and Disability Insurance
- Insurance 4: Auto, Homeowners, and Liability Insurance
- The Home Decision
- The Auto Decision
- Family 1: Money and Marriage
- Family 2: Teaching Children Financial Responsibility
- Family 3: Financing Children’s Education and Missions
- Investments A: Key Lessons of Investing
- Investments B: Key Lessons of Investing
Step 5: Compare Your Budget to Your Actual Expenses and Make Changes Where Necessary
The fifth step in creating an effective budget is to compare your budget to your actual spending. (see Chart 4: budget Example with Differences). As necessary, adjust the amounts you have budgeted for different expenses to create a more effective budget. As you make adjustments, don't reduce payments to the Lord or to yourself.
Creating a budget is a learning experience. You will not create a perfect budget right away, but you can refine it after each month.
If your budgeting plan fails repeatedly, the “envelope system” may work. To use the envelope system, put money (cash) for each expense in an envelope. When the money is gone, it is gone. This system forces you to make your budgeting plan work (no cheating).
If you can't figure out where you are, the best map in the world can't help you get where you want to go. A well-developed budget that is based on your current financial situation can be your best road map to financial freedom. Elder Marvin J. Ashton stated:
Some claim living within a budget takes the fun out of life and is too restrictive. But those who avoid the inconvenience of a budget must suffer the pains of living outside of it. The Church operates within a budget. Successful business functions within a budget. Families free of crushing debt have a budget. Budget guidelines encourage better performance and management (Marvin J. Ashton, “It’s No Fun Being Poor,” Ensign, Sept. 1982, 72; italics added).
Living prophets have counseled us to develop and live by a budget. A budget is a plan for controlling cash flows—specifically income, savings, and expenses. A budget should accurately match a household's financial abilities with its financial goals. Having an effective budget can help individuals and families accomplish their goals. Budgeting spreadsheets (Learning Tool 4: Budget, Balance Sheet, and Financial Statements Worksheet and Learning Tool 31A: Debt Free Planned Spending Spreadsheet) can be found in the Teaching Tools directory of this website.
Chart 4: Budget Example with Differences
For the Income category, neagtive is under budget and positive is over budget. For Taxes and Expenses categories, negative is under budget and positive is over budget.
