How We Do Our Quarterly Budget Review

My husband and I have a budget meeting at least four times each year — at the beginning of January, April, July, and October.

This past one happened on a Sunday afternoon.

Our three boys were awake and they were rowdy, which is their natural state on a Sunday afternoon.

We stopped about a hundred times to get someone a snack, settle a disagreement, locate a missing toy, and answer obscure questions about the world that had nothing to do with our household budget.

We finished the meeting anyway.

I am starting here because I think the version of a quarterly budget review that gets written about (or shown on social media) usually involves two adults at a quiet table with uninterrupted focus.

That version exists in our house exactly never.

But we still have our budget meeting every quarter. Because this meeting is a priority for us. And it is a large part of the reason my husband can be home with our boys in the first place.

A monthly budget review sounds responsible in theory, but some of our expenses do not happen every month. Kids’ activities are the clearest example.

A session of swim or seasonal soccer lessons are costs that land once every few months rather than monthly. If we reviewed the budget in a month where we paid for lessons, it would look like we overspent in that category. In a month where we didn’t, it would look like we underspent. Neither would be fully accurate.

Three months of data smooths that out. The average spend across a quarter reflects what we actually allocate for those categories a lot more accurately than any individual month.

Quarterly is also frequent enough to catch trends before they become problems. One month of increased grocery spending could be due to having visitors or a temporary price spike. But three consecutive months of increased grocery spending is a signal worth acting on.

Before I move on, I want to clarify that we track our spending every month by categorizing all of our expenses in the free Empower budgeting app and then entering those numbers into our own custom spreadsheet at the end of each month.

What we are doing quarterly is sitting down together to look at all of it — three months of numbers side by side with the quarterly averages calculated. The monthly tracking keeps us informed, but the quarterly review is where we assess trends and make decisions.

We open our spreadsheet and look at our average monthly spend for the past three months.

We go through every category line by line — what we budgeted, what we actually spent on average over the three months, and whether the pattern over the last quarter tells us that we need to make changes when compared to the pattern from the prior quarter.

The conversation follows the numbers. Sometimes our spending in a category clearly matches our budget and we move on in thirty seconds. Other times a number leads to a much bigger conversation about what changes we should make and how.

Our grocery spending has been increasing month over month for the past two quarters.

This is not entirely surprising given that average grocery inflation is estimated to be 2.7% and even higher for some categories (like 4.3% for eggs).¹

Our three-store shopping strategy and meal rotation help, but they do not fully insulate us from prices that have increased across the board on the things we buy regularly.

Although our grocery spending has been steadily increasing, we decided not to increase our grocery budget. Instead, we are going to try to bring spending back in line — plans to trial a Costco membership and revisiting how we plan and prepare meals to spend both less money and less time in the kitchen.

We do not know yet whether these strategies will be enough. Grocery inflation is an economic reality that we are navigating just like everyone else. But for now, we can control how intentional we are about the choices we make related to grocery spending and that is where we are putting our energy.

Over the last two quarters, we spent significantly less than we budgeted for in the housewares, home decor, and furniture category.

Our spending in this category wasn’t zero, but if you’ve read my previous articles about our spending habits, this finding will definitely not surprise you.

We decided to reduce our budget for this category, which freed up some money that we could move into the savings category. And that brings us to the bigger picture conversation that came out of this meeting.

In our experience, the most valuable part of a quarterly budget review is the bigger conversation that the accounting piece opens up.

This quarter, that conversation was about our investment goals.

We are close to reaching a specific target value in one of our investments — a milestone we have been working toward for more than a year. We are close enough that we expect to meet that milestone over the next quarter and this quarter’s meeting was the first time we talked about what comes next.

We do not have a fully formed answer yet and we will ultimately decide next quarter once our goal is officially met. But we are starting to think about it now, and that is only happening because we have been paying close enough attention to the numbers to know that something has shifted.

Without the quarterly review, we might not have noticed how close we were. Or we might have noticed too late to think carefully about what we want to do next.

A budget meeting might sound like the kind of thing that matters most when money is tight, but I would argue the opposite. I think it matters most when things are going well. When things are going well, it is a lot easier to stop paying attention.

Lifestyle creep is sneaky. It shows up as a budget that trends slightly upward month over month, and you may never notice it without a system that is set up to make sure you do.

For us, the quarterly budget review is also an act of intentional living. It is the meeting where we check whether our priorities have shifted and make sure that the way we are spending (and saving) money still reflects the life we want to build.

First, you need to set a budget and then you need to track your spending for at least three months. We use the free Empower budgeting app and a custom spreadsheet to track our spending, but you do not need those things. You really just need your budget and your bank statements.

Then, after three months, keep going. It is easy to give up on budget tracking after a few months if things are going well. Put your quarterly budgeting meeting on the calendar before the quarter ends so it does not become something you mean to do but don’t.

Seriously, just making time to sit down and look at the numbers is more than what most people do.

The families I know with the most financial flexibility are the ones who look at the numbers regularly. A quarterly check-in with the life you are building, to make sure it is still going where you want it to go.

If you want to do your own version of this review and are not quite sure where to start, I am building a tool to help with exactly that. More on that soon.

Leave a comment

When you subscribe for free, you’ll receive:

• Weekly newsletters with a blend of behavioral science, personal stories, and real systems for living well on one income and reclaiming time.

• Short stories of families redefining “enough” and reclaiming time with their kids.

• A monthly reflection prompt to help you clarify what “enough” looks like for your family.

All free and sent directly to your inbox.