4 Reasons Your Budget May Change Each Month

Creating a monthly budget is the best way to reach financial goals. But, a monthly budget is not set in stone. It may change month to month.Creating a monthly budget is an important part of keeping your finances on track.

When you don’t track your spending it’s all too easy for your expenses and purchases to get away from you. So much so, that people often find themselves dipping into their savings to accommodate extra expenses. This can limit your future spending potential and prolong your financial goals.

Having a budget can help make sure you don’t overspend or go into debt. Moreover, sticking to a budget can also help you save and reach your financial goals faster.

However, once you do create a monthly budget, it’s important to know that it might not always stay the same depending upon your situation. In fact, there are many cases in which you might find your budget changing every month. Here are four reasons you might need to create a new budget or change your budget slightly each month.

1. You Freelance or Are Self-Employed

If you work freelance or are self-employed, it’s unlikely that you’ll make the same salary every month.

Freelancers don’t usually have consistent work, unless they have a few standing clients. Furthermore, you might find that your rates for freelance work change depending on what the client is willing to pay. That being the case, you could make more or less money on any given month than you did the previous month. If you made less, you’ll have to cut back somewhere within your budget, and if you made more, you can contribute more to other areas of your budget.

The same can be said if you’re self-employed, as depending upon your work, you may also have a fluctuating income. Furthermore, if you’re self-employed, you may also have expenses for your business to factor in. Although you’ll be able to deduct business expenses for tax purposes, you’ll still have to allocate some of your business income to those purchases in the moment.

2. Your Utilities Could Change

Many people opt to have “budget billing” for their utilities, where you pay a set amount each month for your utility services. The handy part about this is that you know exactly what to account for every month. On the other hand, however, you won’t get refunded if you use less of something than planned for and could end up paying more than you planned for if you go over you budgeted utility.

Of course, if you chose to opt out of budgeted billing then your utility bills will definitely change each month, which means your budget for those bills will have to adjust every month as well. If you don’t use budgeted billing, your monthly budget will no doubt change each month to accommodate the different amounts.

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3. You Work on Commission

Working on commission is similar to working freelance in that your income will likely be different each month. Unlike freelancers, however, many jobs that work on commission have at least a base salary that they can then make more money upon. Of course, a person’s sales for a given month or week will directly relate to how much profit someone working on commission ultimately makes.

Unfortunately, the world of sales isn’t always a reliable or consistent position, especially depending on the market. That being said, you may find yourself doing extremely well some months and not so well other months. Hence why your overall income could drastically change month to month.

You’ll have to be prepared to accommodate for those changes and ultimately alter your monthly budget as well. It might be wise to keep a couple of budgets on hand. One of which is a bare minimum budget that works with your base salary alone. Then, work up from there during more affluent times. Your budget may change, but you’ll at least be prepared.

4. You Have Special Events Coming Up

There are lots of events in life that don’t happen every month, which means you won’t necessarily account for them every month in your budget. Times like birthdays and vacations, or special events like weddings, don’t happen all the time, however, they do tend to be expensive.

It’s not likely that you account for these things within your budget on a regular basis. So when they do come up, you’ll have to alter your budget to include these expenses. For the most part, events like weddings and vacations take time to save up for. So you’ll probably have to add a section to your budget for them over the course of a few months. Of course after the event, your budget can return to your normal expenses, unless you choose to continue saving for the next time an event like this inevitably comes around.

This is also the case for life’s unexpected events as well. Things like sudden medical bills or car or home repairs, since we can only prepare for them so much, may also alter your monthly budget as you work to pay them off.

Final Thoughts

Considering all the ways your monthly budget can change may make you wonder why you’d create one to begin with. After all, when most people think of establishing a budget, it often seems like more of a headache than a necessary tool.

However, creating a budget is never a one-time event, no matter your situation. There will always be moments in life when your financial responsibilities and goals change. And when they do, your budget will change as well. Nonetheless, having a well-thought out budget can be the key to managing your money well. It can keep you from overspending, help you save and reach your goals, and alleviate some of the stress that often is associated with finances.

If you do find that your income or financial situation requires you to constantly alter your budget, then the stability of simply having a budget, where there are certain items you’ll always know to account for, can help ensure the security of your finances in the long run.

Do you have a budget that changes every month? What are some tips you’ve found helpful?