Creating and maintaining a sensible, yet practical budget can help you to keep your spending under control, ensure bills are paid on time, and help you work towards your savings goals. But once you create your budget, it’s not designed to last forever, and eventually something can happen that may cause you to modify your budget. Whether it’s just minor budget changes or a complete overhaul, some of the following are major life events that will often cause you to revisit your budget:
Perhaps your old budget involved setting aside a specific amount of money aside each month in order to save for a down payment on a home. You’ve finally reached your goal and purchased your home, so now you’ll want to think of a new savings goal. Maybe now you want to save enough money to go back to college, take a dream vacation, or just save up enough for a large emergency fund. Whenever your goals change, you may need to also make some changes to your budget.
Job changes—both good and bad—can have a major effect on any budget. If you lost your job, quit, got a better paying job or a promotion, you’ll want to revisit your budget. After all, your budget is mostly affected by your expenses and your income, so once your income and job situation changes, you’ll need to adjust your budget accordingly.
Your budget might need a complete overhaul if your marital status changes. If you recently finalized a divorce, your financial situation may or may not change drastically, but there is a lot to consider. For example, will you be paying or receiving alimony? This is just one of the many things you’ll need to work into your new budget.
If you’re about to get married, your budget will likely change drastically as well, especially if you and your new spouse will be merging finances. You’ll want to discuss everything from saving strategies, income and debt obligations, combined expenses, goals, and so on.
If you’re getting ready to retire, it’s unlikely that your financial situation will be identical to when you were working. Not only does your income situation change, but so do your expenses. Everyone’s individual retirement situation is different, so it’s important to take a look at your own retirement situation and create a new budget. What do you have saved up in your retirement fund? How much will you be receiving in Social Security payments? What are new expenses that you have now, and what bills and expenses do you no longer have now that you’re not working? Do you have new goals? These are just some of the many questions to ask yourself as you prepare your new budget for retirement.
Having a baby
Although it can be a very joyous occasion, it can also mean completely changing your budget. Not only are there immediate expenses to consider when it comes to having a baby—such as clothes, a crib, etc. There are also long-term expenses to work into your new budget as well. For instance, you might want to start thinking about saving for college or investing in a prepaid college plan.
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Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.