What do you do if your budgeting models are underperforming?

1 Identify Issues

The first step is to pinpoint where your budgeting models are going awry. Examine each component of your budget to understand which parts are underperforming. Are your expenses consistently higher than projected, or is your income not meeting expectations? By identifying the specific areas of discrepancy, you can focus your efforts on making the necessary adjustments. This might involve a closer look at your assumptions or the data you're using to make your forecasts.

3 Update Assumptions

Budgeting models rely heavily on assumptions about future conditions, such as market trends or cost increases. If your model is not performing well, consider whether your assumptions are still valid. Economic conditions change, and what was true last year may not apply today. Update your assumptions to reflect current realities and re-evaluate your budget with these new parameters in mind.

4 Adjust Strategies

With updated data and assumptions, you may need to adjust your budgeting strategies. This could involve changing your spending habits, finding new income sources, or reallocating funds to different areas of your budget. It's important to be flexible and willing to make changes as needed. A budget that worked in the past may not be suitable for present circumstances, so don't hesitate to re-strategize.

5 Monitor Closely

After making adjustments to your budgeting model, it's important to monitor its performance closely. This will help you see if your changes are having the desired effect and allow you to make further tweaks as necessary. Regular monitoring will also help you stay on top of any new developments that might impact your budget, ensuring that you can react quickly and keep your finances on track.

6 Seek Advice

If you've tried adjusting your budgeting model and you're still not seeing the results you want, it might be time to seek advice from a professional. Financial advisors or experienced colleagues can offer insights and suggest strategies that you might not have considered. Sometimes, a fresh perspective can make all the difference in turning an underperforming budget into a successful financial plan.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?