So you created a budget and are working to follow it as best you can. It is going pretty well and you are like, yes, awesome!!! I am working to meet my financial goals. Then WHAM. Life happens. Now your budget does not work or maybe worse you are deeper in debt. It feels like a set back you might not overcome and maybe you feel like giving up. That may especially be the case if you had to dip into your savings.
What now? Three words – Reevaluate Your Budget.
Simple, re-evaluate your budget. That is, look at what you have budgeted for each line item, both income and expense, and revise to match your change in life circumstances. Here are simple steps to reviewing your budget and revising it to match changes in your life.
Reevaluate your Budget
There are a few reasons you should regularly reevaluate your budget some examples include (but are not limited to) life changes like:
- addition of a child or other member to your house,
- new pet,
- or a new job
- major surgery / illness
- you have continued deficits each month (you are spending more than you make)
- there are plenty of other reasons why you might need to reevaluate your budget.
Another important reason to check in on your budget is to make sure you are on track. If you do not check in regularly on what you have allotted for each line item you plan to spend on. The question is how often should you take a look at your budget? You should look at your budget EVERY MONTH. To check to see if you are staying on track.
That is not what I am talking about in this case, that is just a regular part of checking in with your budget. Reevaluating your budget is when the budgeting decisions you made are not working for your or your family. This type of review is key when you need to make big changes to how you are doing things.
One example of when reevaluating your budget would need to happen:
If you were to get a new job, but that job requires more miles per day, say an additional 50 miles a day, that translates into more gasoline. It also translates into more time on the road and less at home. This could translate into less time to make dinner, pack lunch, etc. So your grocery budget has increased, maybe your restaurant budget or snack budget has increased. A new job may require that you spend money on new clothes or shoes too.
Can you see how that big life change can make a dent in your budgets? But no need to panic! If you know that you are going to be making this HUGE life change you can look at your budget BEFORE you make the change. That way you can cut some other expenses or figure out what your increase to income may be to cover these expense changes.
Now apply that same concept to each of the other potentially life changing events above. You can see how reevaluating your budget when you know something is coming up is critical to your financial success.
So, you may be asking yourself, HOW do I reevaluate my budget?
Revise Your Budget
First you need to sit down, take a deep breath and take it step by step.
- Understand what you currently spend each month. If you already have a budget, use that. If you do not, check out this post on Budgeting 101.
- Estimate potential changes in line items in your current budget going forward. This means take an educated guess on the increases in cost you will experience. In the example above, that would mean estimate the increase in gasoline costs.
- Use that information to formulate an estimate the new amount of what you will spend in each category each month.
- Add all sources of income (regular job, side hustles, anything that brings you Benjamin’s 🙂 In the new job example, you may have higher take home pay, so that should be factored in.
- If you have a deficit in your budget projection, make sure to take a look at all your other expenses and see what, if anything can be cut to cover the increase in costs. This is key to understanding if you will be digging yourself a hole in your budget and just knowing that may help you find other ways to save money to keep your overall budget in line.
Now that you have Reevaluated Your Budget
You need to stick to your budget. This can be hard. Keep a close eye on what you put on your Credit Cards, spend in cash, etc. To do this I created a handy Monthly Expense Tracker. I recommend writing it down. It really works better when you are budgeting if you put the pen to paper. While it might take some time to get the hang of it, you will really see where your money is going and give yourself a chance to fix it!
Here you can find all the forms used. They are super simple, but VERY efficient!
Check out the Monthly Budget Worksheet- Estimate Only
Check out the Monthly Expense Tracker
Before you know it you will be back in the black and rocking your budget!
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Have you not made a budget yet?
If you have not yet made yourself a family budget, then check out these simple steps to make a family budget. It comes with easy to follow worksheets.