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review your budget

5 signs now is the time to review your budget

Is it time to review your budget? Every single one of us needs to take some time to look at our budgets and finances once in a while. The question is, when is it the best time to do so? Since each person’s situation is different, we can’t pin down the exact right time and place for the universally ideal budget evaluation. However, there are some signs it might be time to take a look at your finances. Here are five ways to know now is your perfect chance for a budget review!

First, what is a budget review?

First things first, what does it mean to review your budget? Think of your budget as a living thing that needs constant care and attention. When you do a budget review, you want to evaluate how much money you have earned, saved, and spent. If you have financial goals in terms of setting aside money, for example, see how well you are performing. Each person’s budget review will look a bit different, and there’s no set formula that will work for everyone. However, you will form your own methods and routines for budget reviews that suit you.

#1 You’re taking on a new (big) expense

Any time a new expense arises, it’s time to review your budget. This means big expenses that require active budgeting, so you don’t need to review your finances every time you buy yourself takeout for dinner. However, if you buy a car, or even have to take your car in for a major repair, this is an example of when your budget comes into play. Similarly, if you’re buying a new home, completing renovations, or sending a child off to university or college, these are all huge expenses that will create much more than a dent in your wallet. Things like these need careful budgeting, so if you know they are coming, it’s time to do a budget review now. This ensures that when the time comes, you and your finances will be ready for the expense!

#2 Your finances are changing 

Our finances go through many ups and downs throughout our lives, and that’s okay. The important thing is to prepare for them so they don’t stress you out. In some cases, financial changes are great! If you’re getting a new job, or a promotion, you will likely be reviewing your budget with a bigger limit in mind, freeing up your expenses. However, sometimes we experience job loss or debts, which will obviously reduce our income and increase the money we need to allocate to other expenses. Finally, if you’re retiring, you will be losing your primary source of income, so you need to review your budget to ensure you can comfortably live the retirement you want. 

Financial changes are common. If your financial situation is going to change for the worse in your mind, the best thing you can do right now is budget for those changes as best you can. You can also make an appointment with a mortgage broker to discuss your options for debt consolidation, if that’s what you need.

#3 Your personal life has changed

Our personal lives have a big impact on our financial lives as well. Our budgets often depend on our relationships and responsibilities for others. When we experience big changes personally, it’s time to review our budgets. For example, maybe you recently got married and you now have a greater income with your partner. On the flip side, maybe you got divorced, or your partner has died, and you are now living on your own income. You may also have had, or are expecting, a child or even a new pet, both of which add considerable financial obligations. If you’ve been through any kind of personal change that has had a big impact on your life, it’s probably affected your money as well. Time to review your budget to accommodate these new changes!

#4 You’re applying for new credit

If you want to increase your credit limit, you should first evaluate how this could impact your budget. If you plan to spend more with a higher limit, do you have the financial resources to do so? Review your budget to see if you can fit in more spending before you accept the chance to do so. Be sure to form a plan to ensure a higher credit limit doesn’t push your finances over the edge.

#5 It’s been at least one year

Even if your finances have been steady, your job hasn’t changed, and your expenses are all the same, you should definitely review your budget at least once a year. Even if you think everything is as it should be, sometimes we’re surprised to see how much we’re spending or which expenses we’ve forgotten about, which can take your budget way off track. You don’t want to be in the dark on your own finances, which is why a yearly review is necessary. Hopefully, you’re checking in with your bank account at least weekly to ensure all is as it should be, but a yearly deep dive into your finances is important too. You might find you forgot to incorporate your internet bill into your budget, and you actually have $100 less per month to spend than you thought. These types of things can add up!

What do the results say?

You might be a little anxious about reviewing your budget, but it’s best to rip off the band-aid so you understand where your finances are. You might find you’re right on track and don’t need to make any big changes. You may also discover you need to spend less, save more, or otherwise update your budget to fit your situation. If you need a better budget, you can try an app like Goodbudget, or make an appointment with a broker to discuss your options.

When the time comes to review your budget, it’s important to take your time and not rush through the process. You want to ensure you get a complete picture of your finances so you can make the best decisions for yourself. If you need any assistance with debt consolidation or budgeting for a mortgage, be sure to contact a mortgage broker! We can help you review your budget and put you on the right track to homeownership or debt management.

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.