Why You Should Review Your Priority Spending Every 6 Months
By Mark Yatros
When was the last time you gave your finances a check-up?
Like taking care of your physical health by seeing your doctor regularly, it’s vital to take care of your finances by reviewing your priority spending — aka, budget. Think of it as a “money check-up” that you do every six months.
This process involves reviewing your spending and ensuring that your money goes toward the things most important to you.
It's easy to view budgeting as just another task, but adjusting your priority spending according to your current needs and goals can be empowering. It puts you in control of your finances rather than letting your spending habits control you. This isn't just about cutting back — it's about making smart choices that help you build a solid financial foundation.
The financial impact of life changes
Life doesn’t stand still, and neither should your budget. Significant changes like having a baby, getting a new job, or moving into a new home are exciting, but they also mean your finances need a check-up. Each of these events can significantly affect your financial situation, making it essential to revisit and potentially revise your budget.
For example, a new job might bring a higher income but could also mean different benefits, retirement options, or travel costs. Likewise, buying a house isn't just about the mortgage; it's also about property taxes, maintenance, and possibly higher utility costs.
Adjusting your budget helps you manage these new expenses comfortably without sacrificing other financial goals.
Pro tip: Schedule a "financial review day" after any major life event. This helps you quickly adapt your budget to your new financial reality, ensuring you're prepared and on track.
Shifting needs and spending alignment
Your financial needs will change as you move through different stages of life. It’s important to recognize these changes and adjust your spending to meet your new needs.
Recognizing and adapting to these changes is crucial for maintaining healthy spending priorities. Maybe you've recently retired, or your children have started college; these significant life events can dramatically alter your financial landscape.
It’s a good idea to review your finances regularly to ensure you’re still spending money on what matters most to you and not sticking to old habits that may no longer serve your current situation.
To ensure that your savings goals keep pace with your life, it’s crucial to adapt your budget as your lifestyle changes. For example, if your income increases, consider directing some of that extra money into your savings before you get used to having more to spend. This helps you build a buffer against future expenses or economic shifts, like inflation, which can erode your buying power.
Pro tip: Use a budgeting app to categorize your expenses and track how your spending aligns with your financial priorities over time. This tool can help you visualize where your money goes each month and adjust as needed.
Distinguishing between needs and wants
Understanding how to manage your money starts with knowing the difference between needs and wants. Needs are essential expenses for your survival and well-being, like housing, food, and healthcare.
Wants, on the other hand, enhance your life but are optional, such as entertainment, luxury items, and other non-essentials. By categorizing your expenses this way, you can prioritize spending on what truly matters and avoid overspending on items that don’t contribute significantly to your long-term goals.
Smart spending is about thinking long-term and questioning every expense. Ask yourself, "Do I really need this, or do I just want it?" and "Will this purchase bring me long-term satisfaction or just temporary happiness?" This approach helps you make financial decisions that contribute to your long-term satisfaction and overall financial health. It's about making choices that align with your financial goals rather than succumbing to impulsive buying.
Pro tip: Before making any significant purchase, try waiting 48 hours to decide if it’s a need or a want. This waiting period can help you avoid impulse buys and ensure your spending aligns with your financial priorities. It’s a simple tactic that can save money and reinforce your commitment to maintaining a healthy budget.
Implementing regular financial checkups
Just like you'd schedule regular doctor's visits, setting specific times to review your budget is critical. This helps you stay on top of your finances and ensures you're always working towards your financial goals.
Pick dates that are easy to remember, like the start of a new year and halfway through the year, so it becomes a habit.
It's also helpful to involve everyone in your household in these budget reviews. This way, everyone understands the family's financial goals and can contribute to meeting them. Whether saving up for a family vacation or cutting back on unnecessary expenses, having everyone on board makes it easier to achieve your collective financial objectives. This can also be a great learning opportunity for children to understand budgeting and the value of money.
Pro tip: To make sure you remember these critical reviews, set reminders on your phone or mark them on your family calendar. Treat them as you would any other necessary appointment to ensure your financial well-being is continually being looked after.
Consider getting guidance from a financial advisor
Conducting a semi-annual review of your priority spending keeps you aligned with your financial goals and adapts your budget to any life changes that may have occurred. This practice ensures that your money is always working effectively for you, securing not just your present comfort but also your future stability.
If you’d like guidance on creating the best priority spending plan for your family, consider speaking with a financial advisor. My team and I are happy to meet you for a free consultation. Please contact us here or call (269) 218-2100.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Allegiant Wealth Strategies offers securities and advisory services through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Allegiant Wealth Strategies has offices in Battle Creek and Portage, Michigan, from which we serve Calhoun County, Kalamazoo County, and Kent County (Grand Rapids). The Allegiant Wealth Strategies team offers no-obligation financial planning consultations; call 269-218-2100 or contact us here.