Q:

Why do budgets need frequent reviews and adjustment?

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Quick Answer

Budgets need frequent reviews and adjustments so they can accommodate for changes in monthly expenses, income and lifestyle. Unexpected expenses, such as car repairs or medical bills, also require changes in the budget. The average household budget requires a review at least every three months, according to Debt.org.

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Full Answer

Because most people's expenses change from month to month, individuals who use zero-based budgets must make new spending plans every month, explains Dave Ramsey's official website. This type of budget lists all of the household's income sources on one side of the page and lists all of the household expenses on the other side of the page. Expenses may include mortgage payments, vehicle costs, cable, phones and food. Individuals utilizing zero-based budgets must make the income and expenses equal. If the income is less than the expenses, the individual must find a way to either increase the income or decrease the expenses.

Creating a budget is beneficial because it helps individuals and households reveal wasted money, create priorities for their money and reduce stress related to finances, notes Debt.org. A budget also improves people's financial situations by teaching them to use money as a tool for meeting long-term goals and future financial needs.

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