Make Adjustments
Life is always changing - your get a new job, your car breaks down, a family member's birthday is this month, etc. Any and every event has an effect on your financial situation. So, you should be prepared to adjust as your monetary situation changes.
Following the Three R's of Budgeting
Review
Once you've established a budget, it's important to remember that these numbers and figures are not set in stone. You and your budget are constantly evolving, and require regular maintenance.
There are two different methods for reviewing your budget: PROACTIVE and REACTIVE. Decide which works best for you!
PROACTIVE
- Reviewing your budget on a daily or weekly basis, as opposed to at the end of your budget time frame.
- This method allows you to make changes to your budget as you experience them.
- If you find yourself overspent, you can pull money from another category that still has funds available.
REACTIVE
- You are only reviewing your budget at the end of your budget time frame.
- This method will allow you to look at your budget, see where you overspent, and plan better for next time.
- The downside to this method is that you might have already overspent by the time you review.
IT IS RECOMMENDED THAT YOU REVIEW YOUR BUDGET ONCE AT MONTH, AT MINIMUM.
Revise
After you've reviewed your budget, take a look at your spending and see where you went over or under. Carefully examining your spending, upcoming and preexisting expenses, as well as changes in your income or personal situation will help you revise your budget for the next period of time.
When reviewing and revising your budget, it is important to ask yourself:
- Did I over or under spend?
- If I overspent, what did I spend on and why?
- Could this have been avoided?
- Do I have something coming up (credit card bill, birthday party, tuition payment) that I need to set extra money aside for?
Rewrite
Now it's time to take what you've learned from reviewing and revising and put it to work! Use the information you've gathered to come up with a new and improved budget that will be more efficient. Try taking a proactive approach when it comes to reviewing your budget and get one step closer to reaching your financial goals!