Adjust your finances as life happens

A spending plan is a well-thought-out strategy that turns a budget into a manageable part of everyday life. If you already have a plan, what’s next? Most people understand the importance of sticking to a plan, but as your life changes and you work toward new goals, your spending habits will likely shift as well. When you don’t account for these changes, it’s easy to fall short of your goals.

Learning to adapt to changes is key to creating a healthy relationship with your finances. Taking control of your money means customizing your plans to your needs, so it’s important to remember to be flexible and open to change.

To make sure your spending plan works, track and adjust your spending on a regular basis. Here’s what that might look like.

Know when to adjust your spending plan

1. Your income changes. This includes both increases and decreases: events like a promotion, a job loss, a raise, or other changes.
2. Your situation changes. This includes moving, getting married, having a child, or having a loved one pass away.
3. Your financial goals change. Maybe you’re ready to start saving for a wedding or a down payment on a house. Or, maybe you want to pay off student loans or credit card debt in the near future.

Adjust expenses in your spending plan

Look for opportunities within your expenses to make changes. Here’s how to do so:

1. Re-examine where your money is going. It’s valuable to keep regular tabs on how you are spending money. Keep an eye out for “lifestyle creep” — these are small changes you’ve gradually made, such as going out to eat more, or making slightly more expensive purchases. Perhaps you’ve been promoted at work and want to splurge a little on yourself with new clothes. It’s OK to enjoy your accomplishments, but be sure to think about how this may affect the rest of your spending plan in the long-term. Look for balance: if you want to start spending 10 percent of your income on clothing or entertainment when you used to spend 5%, then look for ways to cut in other areas.
2. Find opportunities to reduce spending. As you re-evaluate your plan, look for things you continue to pay for but don’t actually use. This might be a subscription or service that doesn’t offer what you need anymore. For example, if you recently got married, you and your spouse may want to consider consolidating your subscriptions to help cut costs. Be sure to review expenses that are coming out of your account automatically that you may have forgotten about.
3. Find opportunities for discounts and deals. Every year or so, take another look at what you’re paying for items like insurance, internet, or other utilities. You could benefit from finding a new service provider or negotiating a lower rate. Perhaps you’ve even shopped at a store enough that you’re eligible for discounts. Being aware of these opportunities can help with your financial goals. Small changes like this can add up and make a big difference when you’re working toward a goal such as saving up for a down payment on a house or paying off student loans debts.

Don’t forget to make adjustments to your plan as you go through these steps.

To be valuable, your spending plan needs to be flexible. By both meeting current financial goals and knowing when it’s time to adjust, you can make sure you’re getting the most out of your resources.