Updating the PHP for your website is an important and vital part of maintaining a healthy and secure website. PHP updates can increase the performance of your website and patch security issues similar to the WordPress Core updates. However, the PHP Level is important as PHP is the code that WordPress is based upon and the latest PHP is the cleanest and best version.
If your site is being hosted by WPDesigns Hosting then I will make sure that the PHP is always up to date for you.
To update your PHP level by yourself, you will need access to your CPanel account or send a message to your hosting service. Sending a message to your web host will often prompt them to make the update for you. After you/ they have made the update double check your site to make sure everything is still running as it should. An out of date plugin or theme may have compatibility issues with the PHP and will need to be updated or removed if it is no longer possible to update and causing compatibility issues. The opposite is also true, you may not be able to carry out plugin and theme updates if your PHP is not up to date.