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Just because you have a personal budget set up doesn’t mean it is set for life. Here are five signs you need to take another look at it.
Life happens and things change. Your personal budget will need to change with everything else around you. The problem is a lot of people will set their budget and think that is it forever.
If you don’t change your budget, you can end up overspending here and there. You may find that you don’t put as much as you could into savings, and life starts to creep in.
Not sure you need to rethink your budget? Here are five signs you should.
You’re not able to stick to your personal budget
Let’s start with you being honest with yourself. You have a budget*, but are you sticking to it? Now, some of this will take willpower. You need to assess whether every purchase you make fits in with your budget. You need to say no to yourself sometimes. It doesn’t matter how much you want it; if it’s not in the budget, it’s not in the budget.
However, there are some expenses out of your control. And there are times that your budget wasn’t realistic to start with. If you’re struggling to stick to a budget for those reasons, take another look and set a more realistic one.
Your income has changed
If your income changes by a couple hundred dollars each month, there’s not usually a need to rework your personal budget*. It’s when you get a raise at work, or if you lose your job. A significant change in your income means a significant change in your lifestyle.
Let’s say you add $1000 per month to your income. How are you spending that $1000? You’d be best putting it into savings and investments, but if you don’t budget for that money, you end up overspending and life creeps in.
Now let’s say you lose $1000 per month. Where are you going to take from your budget to factor that in? You need to cut back in places, while you figure out a way to replace that income.
You’re moving in with a partner
Are you taking the next step in life with your partner? If you’re moving in together, you will need to rethink your personal budget. Not only will you need a personal one, but you’ll need to set up a household budget.
Of course, you will have had conversations about how to split money before moving in. Now it’s time to put things in practice. What are you going to do with any money you could end up saving on rent thanks to two incomes? What will you do when you need to spend extra money on food? What about other household expenses that you didn’t have but your partner does?
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Your personal budget changes when your life goals change
You may have had a goal to save for a deposit on a house. Now you have bought that house. What is your next life goal? There are always changes to your financial goals, and you need to look at your budget with each of those changes.
If you don’t rethink what your next goal is, you’ll end up just spending the money you used to save. Maybe you don’t even know what your next goal is. While you think of that, make sure you set a designation for the money you have. I’d put it in retirement funds while you figure it out. At least it’s being saved for something in the future.
You’ve cleared all your debt
When you have a lot of money going toward debt, you don’t have a lot to save. You need to get out of that debt, though, and that’s why you set the personal budget* in the first place. Now you’re out of that debt.
You suddenly have hundreds of dollars left to spend each month. And if you don’t set a use for that money, you will likely just spend it. And you could end up landing yourself back into debt because you forget about your budget. Look at your budget again, work out where that money is now going, and stick to a plan to remain debt free in the future.
MORE: 5 types of savings accounts I have for my personal budget
When have you looked at your personal budget again? Share your thoughts in the comments below.
