When You Need to Update Your Budget

Posted by Don on October 25, 2016

We recently covered the Worthwhile Benefits from Living on a Budget to highlight what you might be missing if you don’t have a budget.

However, if you are someone who has created a budget and you actually follow it, when was the last time you updated it? I ask because if you are not updating your budget as your life evolves, your budget isn’t going to be very helpful at guiding you towards reaching your goals. In fact, it will be worthless.


(Photo Credit: jannoon028)

Times When You Need to Update Your Budget

When should you be updating your budget? Below you will find four times when you should be updating your budget.

After You Create It

A few months after you create and follow your budget is a great time to take a couple of minutes and review it. Odds are there are some categories you missed completely or others where you under-estimated your spending.

For me, both of these applied. I realized I never made a category for gifts. When it came time to buy a gift for my sister’s birthday, I was classifying it as miscellaneous since I forgot to add that category. At the end of the month, seeing a large number in that category really is concerning.

In addition to that, I didn’t estimate the right amount for tolls. I have an EZ Pass that debits my bank account. I thought it took money every other month but I drive on toll roads more than I thought and it really costs me more.

Make sure you take a few minutes to review your budget 2-3 months after creating it so you can make sure it is correct.

Life Happens

Another reason to update your budget is because life happens. What you think is a set amount one month could change going forward. For example, our cat had some medical issues recently. We used to budget $70 per month for his expenses. But now he is on medication, so that monthly number needs to change. Is Pet Insurance Worth It?

And since he won’t be on the medication forever, at some point down the line, we will have to make the change again.

What has life brought to your table recently that has caused a change in your spending? Did your auto insurance premium change because you were in an accident? Maybe your central air conditioning unit needed repairing or you had a medical issue.

In any of these cases, it is important to stay on top of these things so you can update your budget accordingly.

Needs Change

Maybe there was a change in your daily needs that will make updating your budget important. Did a child go off to college or do you have a new baby? Either of these will force your needs to change and as a result your budget. After all, if you don’t update your budget, you will be going into the red for many categories.

And this takes us back to the whole point of having a budget in the first place. If you are just throwing numbers into your budget as the month progresses, at the end of the month you are not going to have a very clear picture of what happened with your money.

You might spend the next few months trying to change one habit when the real issue is something entirely different. You just don’t know this because your out of date budget is misleading you.

Incomes Change

Up until now I’ve been focused on expenses. But what if your income has changed? Maybe you took on a second job? Or maybe you earned a promotion. Either of these will cause a change in your budget.

On the surface, updating your budget might not seem as important but it really is. If you want to get ahead financially, you need to save and invest a portion of your income. If you are only saving that portion based on your old salary, you are going to wake up one morning and realize you haven’t saved enough. Updating your budget when your income changes is just as important as when your expenses change.

Lastly, be sure also to make the changes to your budget if your income decreases. While it sounds good to save more money each month based on a percentage of your income, if your income was drastically reduced you won’t have enough money to pay your bills if you try to save too much.

Final Thoughts

At the end of the day, your budget is going to constantly need updating and tweaking. It is not a snapshot of a moment in time with regards to your financial life. It is a tool to help you get ahead financially. By taking the time to keep it optimized for your current situation, you can assure yourself that you are making the most of your finances.

More on Budgeting

Amazon $60 in Promo Codes When You Upload a Photo

Posted by Madison on October 21, 2016

Amazon is giving out $60 in promo codes when you upload a photo to Amazon Prime Photo. At first I couldn’t figure out why Amazon wanted us to upload photos… then I realized that they are trying to get us to use their photo storage program called Prime Photos. As part of the program they’re […]

Continue reading…

How to Overhaul Your Financial Life in 10 Years

Posted by Don on October 20, 2016

Your finances are in shambles. You are desperate for change but you aren’t sure what to do or if making any changes are even worth it. After all, the mess you are in feels insurmountable. Can you overcome poor financial decisions and change your financial life for the positive? Is it even possible? The answer […]

Continue reading…

Tricks to Save Money on Health Care Costs

Posted by Don on October 18, 2016

I’ve dealt with a decent amount of medical bills so far this year, and it should come as no surprise that medical treatment is expensive! (And don’t get me started on the confusing statements I get that talk about the cost, covered amounts, co-insurance, and everything in between.) Tricks to Save Money on Health Care […]

Continue reading…

Chase Sapphire Preferred $500 – $625 Sign Up Bonus

Posted by Madison on October 14, 2016

I mentioned in my Huge $5,325+ Credit Card Application Spree that the Chase Sapphire Preferred card is second on my list. (The first card is the Chase Sapphire Reserve 100,000 Point Sign Up Bonus Worth $1,500+). Now that we have two very different Chase Sapphire cards, we need to distinguish between the Reserve card and […]

Continue reading…

Why You Need to Give Your Money Meaning

Posted by Don on October 13, 2016

When it comes to money, we all want as much as we can get. But not only is making money important, so is saving money. We save so that we can enjoy the future financially and so we can overcome any financial setbacks we encounter along the way. However, there are many times when we […]

Continue reading…

Huge $5,325+ Credit Card Application Spree

Posted by Madison on October 11, 2016

It’s finally time for a credit card application spree! I’m really excited about this one because of the huge sign up bonuses that came out recently. It’s not very often that the timing of one of my application sprees lines up so perfectly with oversized bonuses on multiple cards! Credit Card Application Spree I take […]

Continue reading…

I missed out on the big 100,000 point American Express Platinum bonus last spring since it was only live for less than a day. I’m excited we have another opportunity to pick up 100,000 points, this time for American Express Business Platinum card. The sign up bonus just increased to 100,000 points. The timing is […]

Continue reading…

I’ve been noticing a trend lately of a new way that companies are tricking us into paying more for products. Well, it’s not really a new system, but rather it is an old system that they have realized can be applied to their business model to make more money. What is this method and have […]

Continue reading…

How to Get an Exception to the Chase 5/24 Rule

Posted by Madison on October 4, 2016

The Chase Sapphire Reserve 100,000 Point Sign Up Bonus Worth $1,500+ is one of the most popular sign up bonuses right now. Of course, that’s obvious since the bonus is one of the largest ever. But the big bonus also came out after Chase implemented a new rule targeting those of us who might love […]

Continue reading…