Budgets Aren’t Automatic

For years, I’ve been trying to create a budget that’s automatic. The thought of being able to put my finances on autopilot is really appealing.  However, I’ve yet to complete it. That’s because life and money are fluid so your budget should be too.

As I mentioned in the post earlier this week, budgets are an important map to reach your financial goals and it should be a reflection of your values.  But outside factors can have a huge impact on our budget – emergencies, a change in employment, or even obtaining new information.  All these are reasons why we need to update our budgets every so often.

For example, I’ve been looking into the benefits offered by my employer.  As part of my medical plan, I have an HSA (health savings account). I’ve had this for 4 years and didn’t know much about it until just recently.  This is not only a great benefit in regards to medical expenses but it can actually be used as an IRA in retirement.  Learning that, I decided to adjust my budget and start to fully fund the account (limit is $3300/year for an individual). The benefit is two-fold in that the contributions also reduce my total income taxes.

Sometimes our goals change as well.  If you’re looking to start a family, travel more, need to replace your car, etc. you’ll need to modify your budget to reflect this.

While I wish I could tell you to create a budget and allow it to run itself, that just isn’t the case.  Don’t feel defeated if adjustments need to be made, especially when first getting started.  Once you have a budget that’s working, you shouldn’t need to review it more than once a month. It’s time well spent.