Analyze using this formula:

Planned Spending (what you planned to spend last month, i.e., budget "Now" column) less Actual Spending (i.e., what you actually spent last month) = Variance (i.e., the difference).

If you are consistently spending more than you budgeted (e.g., "in the red") you may need to adjust your budget. The example below shows how one family stayed "in the black" only by cutting way back on the amount they saved last month (a variance of $820).

Analysis of Significant Variances from Last Month:

• Spouse worked less hours last month due to illness
• Groceries outlay larger than usual (paper goods)
• Other expenses higher due to furnace repair
• Couldn't afford to save last month
• Higher cost of utilities due to cold weather

Changes to Budget for Next Month:

• Increase groceries budget by $50 a month (reduce Savings by $50)
• Sign up for level payment at Power Company
• Add new budget item for Home Maintenance

Also see Hang On To Your Earnings