5 Times You Should Definitely Review Your Budget

If you want to have a sound financial security, it is important to build a budget. However, doing that is only the beginning.

The thing is that your financial situation can change from one year to the next. And sometimes, it does not take even that long. Situations change between weeks and even days! For instance, you suddenly discover that you are going to be a parent. But did you save enough for it? Have you invested for this eventuality, or is it like a bolt from the blue for you? Ideally, no matter what the situation is, you want to have some elbow room so that you can change your budget according to the situation.

Here are a few times when you may want to revisit your budget.

1. Monthly: You want to sit down with all your payable bills at least once a month. Use this time to study your budget properly, even if it is with a quick glance. This might not be the right time to make big adjustments, it is time enough to find mistakes in calculations, unexpected expenses, and such. Thus, you can easily make small changes.

2. Oversee the budget when your income changes: You base your budget on the money you make per month. What happens when that changes? After all, you can get a promotion, or you may change jobs and get one with a better salary. Anything can happen. And when it does, it is a good time to check on your budget. You should do it even if you get a part time job, cut back on hours and lose your job. Review your budget whenever there is a change in your home’s net income.

3. When you take a new loan or debt: New loans and debts change a lot. For instance, if your previous monthly expenses were of a certain amount, and now you have taken a car loan, you can’t expect to keep that same amount of expenses you enjoyed previously. No, you now need to save up as much as you can. Repaying your debt is your priority now. So oversee the budget, check where you are losing money and how, and correct mistakes if any. At the same time, be sure to check your credit score and credit report. 

4. When you achieve some financial goal: What are financial goals? These include paying off a debt or loan, repaying credit card debt, and the like. For instance, perhaps you have saved a few month’s worth of expenses for your emergency fund, and if so, you can fuel that into your retirement savings. See why it is important to review your budget?

5. When there is a major life event: There are always major life events. These include marriage, having a baby, your child’s education, a foreign trip, and so on. These bring big changes into your life, including big financial changes. Because of that, it is a good time to review the budget and plan your income, expenses, assets and liabilities.

When you budget during these times, you can be sure that you will be ready to meet anything life throws at you, even a pandemic!