Budgets are some of the most useful financial tools you’ll ever use. However, not every budget will work as well as you might like it to. Sometimes, even if you start with the best of intentions, you could end up spending more than you expected one month. Unfortunately, if you do end up busting your budget, then you’re going to need to spend some time and effort bouncing back.
The good news is that we all make mistakes sometimes, and as long as you’re willing to learn from what happened and move on, then you’re already on the right track. Here’s everything you need to know about recovering when your budget takes a hit.
Step 1: Look for Ways to Rearrange your Budget
Some budgeting issues are tougher to handle than others. If you’ve spent a little more than you meant to on entertainment this month, then you might be able to balance things out again by looking for places you can reduce your spend elsewhere. For instance, you could lower the amount you spend on food and drink by buying more products that don’t have a fancy brand name attached to them.
Alternatively, you could find out whether it’s possible to cut the costs of petrol and diesel for a month by walking to the locations you want to visit instead of driving everywhere. Pinching the pennies in a variety of different categories can help you get back on track in no time.
Step 2: Use a Loan or Your Emergency Fund
Perhaps the biggest issue involved with over-spending on your budget is that you end up with no cash left over to pay for the bills and expenses that you know you can’t put off. If you’ve already spent everything you earned this month, and your wages aren’t due for another week or so, then you need to find some money somewhere to pay for what you need.
One option is to use an emergency fund. If you’ve been careful with your cash up until now, then you might have saved something aside for a rainy day. However, if you weren’t able to save any extra aside for “just in case” expenses, your best option will probably be to look for a loan. At least that way you can spread paying what you owe back over a certain period, rather than scrambling to find a chunk of cash all at once.
Step 3: Adjust your Ongoing Spending
If you’ve been forced to take out a loan so you can deal with the expenses that you can’t cover after you’ve broken your budget, then you’ll need to adjust your spending going forward. This will be the only way you can make sure that you know you can afford your repayments. However, even if you didn’t take out a loan, it could be a good idea to adjust your spending and place extra cash aside for “just in case” costs.
It’s also worth making sure you pay extra close attention to the problem areas that you deal with every month. If you know that you always spend too much when you go clothes shopping, for instance, put a strategy in place to protect yourself. Maybe you could leave the cards at home and only take the cash you know you have?
Step 4: Check your Budget is Still Realistic
If your budget ended up in trouble this month, but you’re not sure what went wrong, it might be time to look at your financial strategy and make sure it still makes sense. For instance, you might think that you can afford to spend $100 a week on lunches at work, but when it comes down to it, that could mean that you can’t afford to put any money aside for your goals or savings.
Look carefully at your budget and ask yourself whether you’re moving towards your goals, or just making ends meet each month? If you’re struggling, then it might be time for a change.
Step 5: Learn from Your Mistakes
The most important thing you can do after a budget issue is learn from what happened. Try and use the information you’ve gathered about your spending habits to avoid any slip-ups in the future. Learning from your oversights will help you to become more financially independent in the future, it will also mean that you don’t get bogged down in feeling guilty about the mistakes that you have made so far. Remember, we all make mistakes sometimes, use yours to learn and grow.