As your life changes, your budget should too. So when should you review your plan?
- Annual review: Even if nothing major changes, review your budget at least once a year. Along with annual price increases, your goals and your priorities may change over time, and you’ll need to update your budget accordingly
- Review when you get an increase: If you get an annual increase, time your annual budget review around this. Also remember to adjust your budget any other time you receive an increase – such as after a job change or promotion. Aim to increase all your debt repayment and savings contributions by the same percentage as your increase. This way, you’ll pay off your debts more quickly without noticing the impact on your pocket, and your saving contributions will keep up with inflation
- When life changes: You should also adjust your budget if your lifestyle or circumstances change. For example, if your family grows (or gets smaller when children leave home), or your income decreases for a time
What to check for:
Each time you review, there are a few key things you’re checking for.
- Are you spending too much? It’s always worth reviewing your spending to identify where you may be overspending
- Could you save more? Increase debt and savings contributions whenever possible
- Are you spending enough? If your circumstances have changed, you’ll need to increase your budget to reflect this. For example, your food budget will increase as your family grows, and you may need to add school fees. Also check that you are spending enough on expenses such as insurance and medical aid
If you already have insurance, check whether you are appropriately insured as part of your yearly review, as you may be over- or underinsured. You don’t want to pay for insurance you don’t need, but it’s also critical to make sure you have enough insurance as your life changes.
If you’re unsure about what you should insure, start with anything that is essential for your family’s security or what you need in order to earn your income. You may wish to speak to an FSCA-registered financial adviser to decide what insurance is right for your needs.
