What do you do with your budget after the month is over, and you’re ready to begin a new month? Most people don’t realize it, but your spending throughout the month gives you some incredibly helpful information.
You need to decide which period you want to track. Some people find it easier to do it based on when they are paid, and some like to track their expenses each specific month.
To figure out your closing balance for the end of the month, you need to use the following formula:
Opening Balance (what you have in your bank account and cash envelopes at the start of your budgeting period) + Total Income (what money comes in during the month) – Total Expenses (what money you have left at the end of your budgeting period).
Your closing balance for the month should equal your starting balance for the new month.
One way to check to make sure that you closed out your budget correctly, is to make sure that your closing balance matches what you have in your checking account and cash envelopes on the first day the new month.
The Opening Balance of any month will ALWAYS be the same as the Closing Balance of the previous month.
Where Did My Money Go? Additional Resources