5 reasons to update your personal budget regularly

One of the first steps on your Debt Relief Journey is to create a budget that allows you to pay off your debt. But if you want to be successful on your Debt Relief Journey, creating that budget is not a one-time event. Learn more in today’s blog. 

Budgets are not a one and done tool. That would be like getting a haircut and thinking that you don’t have to get your hair cut again. While it is possible to cut your hair once and prepare one budget, both activities are more effective when done more frequently. Here are 5 reasons to update your budget regularly. 

1. Your priorities change

As we grow and change, our priorities change, too.  A good example of this is being in the habit of buying a fancy coffee every day. Often to support this kind of daily coffee habit, you need to spend $5.00 per day or more. That is $35+ per week, over $140 per month and $1,820 per year. You can see how giving that habit up could help you pay down some debt. 

But if you have that money built into your food or entertainment budget, you don’t want to leave those funds there when you give up the fancy coffee. You will need to update your budget so you can choose where those extra funds are going.  Your change in priorities necessitates a change in your budget. 

2. Your needs change 

Another reason you need to update your budget is to meet changing needs. An example of this could be adding a baby to your family. Your spending needs will change significantly when you add a baby to your family. In addition to changing your priorities, many things that worked before your baby don’t work the same anymore. Babies change your needs.

Consider food costs. When you have a baby, you go from feeding two people, to feeding three. In addition, a baby’s nutritional needs are very different from an adult’s needs. The food that meets a baby’s needs costs more, too!  You need a new budget so you have a plan that works with your new situation. (i.e. the baby)

3. Your expenses change

Another reason you need to change your budget is because your expenses change. The prices you pay for items in your budget are not fixed. Those prices will change regularly. Rarely do prices increase at the same time your income does. To deal with the increase, you need to change your budget so that everything you need is still covered by your income. 

4. Your income changes

A good reason to change your budget is because your income has increased. It is good to have more money coming in. But you need to be especially careful when your income increases. If you are not intentional about what you do with the increase, you will just end up spending the money. Many little things will make that money go away.  Nothing productive will happen with the money unless you appropriate the money correctly!

On your Debt Relief Journey, the best use of a pay increase is to apply that money to your debt to get it paid off sooner. Once you have paid off debt, start by saving the money you were applying to that debt. Since those funds were not available anyway, why not build some savings for yourself?

5. Your life changes

Many things can happen in your life that will affect your finances. You could lose your job, or get a different job that pays you more (or less) than your old job did. You could get married or have children. These and many other life changes will all affect your finances and create a need for an updated budget. 

Your own changes may be different than the examples that I used today, but the principal is the same.  You need to regularly update your budget to match the changes in your life!

One of the best ways to focus your attention on the positive aspects of your Debt Relief Journey is to make sure you have all the tools you need for your journey. Take my free debt relief workshop to make sure that you do!

Sign up for my weekly blog which provides you with the specifics for preparing a good budget for your business, if you have one.  Share this blog with an entrepreneurial friend!

IN CONCLUSION

1. Changing certan priorities can help you pay down debt.

2. As you needs change - it's a good time to update your budget.

3. Find out how to change your budget as your expenses change.

4. Merit increases at work may seem small, but they add up over a year.  Use them to pay down some debt.

5. As life cycle changes occur, it's a good time to update your budget.

RESOURCES

Article: The Fed Just Cut Interest Rates. Here’s What That Means for You.

Article: What the consumer spending report tells us is incomes and savings are up, inflation is down — and the Fed is cutting rates

Book: Menopause: What Your Mama Didn't Tell You

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Anything you tolerate becomes normal to you. When you stop tolerating debt, you increase your ability to function without it.  You can get yourself debt free. It will take some time, but the time you spend is worth it!- Dan Heiland

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