In one of our very first posts about How to Form a Budget  we provided some basic steps to get the budget gears rolling and establish your first budget (or perhaps reestablish a budget after you’d gone astray from your other attempts).

Another important part of budgeting is knowing how to look at your spending within your budget and adjust as necessary. A budget should be fluid and with every move, job change, pay raise, or shift in priorities (like children entering the picture) updates need to be made. 

It’s important to understand that changing your mind about your budget is always an option, not as an excuse to be irresponsible but as a reflection of your priorities. You have not failed because your priorities have shifted, you are adapting. It’s a sign of attentiveness and maturity to understand when you’ve changed and how your financial goals should change as a result. 

If Your Income Changes

Your paycheck can change for a number of reasons. If you’ve been promoted to a new rank or your base pay increases because of a cost of living adjustment, that’s excellent. It may also be the case that your pay decreases due to a change in position or perhaps your spouse chooses to discontinue working. Either way if you experience a change in your income your budget must adjust accordingly.

If your income increases:

  • Give every new dollar a purpose.
  • Increase the amount you save each month.
  • If you haven’t already, create an emergency fund.
  • Throw more money at your credit card or loan debt.
  • Try living with the same budget you already had, and bank the increase.
  • Enjoy the fruits of your labor! Within reason of course.

If your income decreases:

  • Decrease your discretionary spending, gas, entertainment, etc. by the percentage that your income decreased if possible.
  • Look for opportunities to refinance your debt to lower your interest rate, whether that is your mortgage, or car payment.
  • Consider doing a balance transfer on your credit card, where you rollover your debt to a new card with a 0% initial interest rate.
  • Start a side hustle, whether driving for Uber or Lyft, doing online surveys, or get a second job (make sure to check with your commander on this).

Your budget will be fluid based on your income, and that’s okay.  Think of it as a muscle, it can flex and grow depending on what you need it to do.

 If Your Priorities Change

We’ve written extensively at this point that your budget should reflect your passions. We want to encourage you to continually ask yourself “does my budget still reflect my convictions?” As people we change based on our experiences, relationships and new ideas we encounter, and our budget will change with those. Thus we recommend that every three months you review your spending and ask “am I still spending money on what is important to me.”

Perhaps you’ve connected with an organization such as Big Brothers Big Sisters, would you consider donating to the work they do? Or maybe you just had a nephew born, and you want to be able to see them multiple times per year, that will take some cash to make happen. Even if something hasn’t changed, having a mission statement for your money keeps you on track with your spending. It also keeps you motivated to sacrifice for your financial goals. When you align your money with what matters most to you, budgeting becomes second nature.

How have your life goals, and your budget changed in recent years? Did you find it difficult to make those changes? We’d love to hear from you.

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