Over the last few weeks I wrote about setting up a budget. If you followed the steps so far, or already have a budget in place, you are in a great spot. It will be important to check in on a budget from time to time to make small adjustments. This is where we determine if a budget is working or if we need to make changes.
Calculate your savings needed to reach your goal
Find a budget that works for you
Track everything for the first month or two
Adjust
Review your progress
Before COVID-19, one of our daughters was getting weekly piano lessons. Unfortunately due to the lockdown in March and the following months we were unable to send her to lessons. Piano lessons were a budget expense for us each month and it no longer was being used. For the next three to four months we wouldn’t be sending our daughter to lessons.
Instead of letting these funds accumulate, we wanted to find another place for them. At the same time we reviewed our utilities budget and realized that being home all day every day takes a toll on our electricity. Especially when we are running the air conditioner frequently. We ended up shifting some of our savings from no longer taking piano lessons to our utility expenses. With a little extra left over I decided to also pay myself first and increase my 401k contribution by 1%.
A very important step of any budgeting process is to be flexible and expect changes to happen. Inevitably your budget will need to be reviewed and updated. Any type of change can have an impact on a budget whether large or small. An event like buying a new(er) car can impact multiple categories on your budget such as a new payment, car insurance and your gas consumption. If there is a change of employment, this can impact a lot of different categories as well. Adopting a pet, moving to a new town or city, having a child, or buying a house are other examples. Even if your life is pretty consistent, inflation will force you to make changes to your budget over time (looking at our budget from 2014 when our internet cost us $25 dollars per month, now its over $90).
Have you noticed an inflation style rise in cost for a service or item over the last few years? Has COVID-19 impacted the way you use your money? If so let us know in the comments below!
Our final post for this budget series will be next week we will discuss our review process to any budget strategy.
