BudgetingDebtLife

How to Deal with a Blown Budget

Budgeting, like any habit or discipline, does not magically happen overnight. However, if you continue to work your budget, month by month, the habit will become more routine, and you’ll find yourself sticking to the budget much easier. BUT, what happens in those instances when an unforeseen event blows your budget early into the month, and you feel like you’re not going to be able to get back on track??

It can be really easy to allow additional failings to occur, once you’ve blown the budget already. It’s like being on a diet and having a “cheat meal”. Maybe you have that cheat meal at breakfast (hellooo, Sunday brunch!) Then at lunchtime, you think to yourself, “well I’ve already cheated at breakfast, I might as well make it a cheat day!” And unfortunately for a lot of people, that cheat day becomes a cheat week, and next thing you know, you’re off the rails completely. How do I know this? Because when it comes to dieting, I am that person!!

If you’ve already blown your budget in one area, admit that it’s blown, but then regroup and refocus on your overall game plan for the month.

These four budget fixes will help you get back on track:

1. Make sure your budget is reasonable. Budgets require knowing where money is being spent, as well as how much. When first making a budget, it’s easy to incorrectly estimate how much you actually spend on different items. Appearance and reality often collide.

  • Until you have some real data to use, build a buffer into your budget to protect against overspending. When you overspend in one area, you can use money from the buffer category to offset the difference. I usually name this buffer the “miscellaneous” category.
  • Over time, your estimations will improve and the buffer category can be reduced or phased out. You might decide to keep it in your budget permanently, but keep the amount down.

2. Use the more flexible budget categories to correct spending mistakes.Some categories are much more flexible than others. Your rent or mortgage payment isn’t very flexible. But things like clothing are flexible. You can purchase a $20 pair of pants or a $300 pair of pants. That’s flexibility. Eating out is similar. You don’t have to eat out.

  • It’s quite easy to cut back in these areas in the event that another category has been overspent. Eat in instead of going out. Rent a movie instead of going to a concert. Better yet, check out a movie from your local library for free!

3. Avoid waiting to ask for help. When people get behind on their bills, many panic. Sometimes the solution is as simple as asking your creditors for a little extra time. Many are far more accommodating than you might think. Communication is absolutely critical when dealing with creditors and collectors. Creditors know that if they’re willing to work with you, you’re more likely to be able to pay them.

  • Avoid jumping at costly solutions. Payday loans and credit card advances can be difficult debts to eliminate — AVOID THEM LIKE THE PLAGUE. These types of solutions often result in additional rounds of similar solutions. The amount of debt you owe seems to keep increasing all the while.
  • Similarly, while debt consolidation seems like it may temporarily solve some of your debt problems, in most cases you end up paying even more for it, and the only party that profits off the situation is the debt consolidation company!
  • Negotiate with your landlord and even your utilities to see if an alternate payment arrangement can be reached. Never assume you know the answer before speaking with them.

4. Adjust your budget as needed. If you’re consistently coming up short, your budget likely needs to be adjusted. It might be that your income simply doesn’t allow for the estimates that you’ve set in the more discretionary categories, such as entertainment and/or restaurants.

  • If you’re still struggling, keep track of every cent that you spend for a month. This includes the spending of loose change. Track everything. Then ask yourself how this compares with the budget you’ve set. Where are you making an error?
  • If your expenses are pared down to the bare minimum, it may be time to reexamine your income. Your problem lies in either too much in expenses, or too little income. A temporary side hustle while you work your way out of debt may give you the relief you need.

Living within a budget is a part of being financially responsible. Everyone overspends from time to time. The solution is to make the necessary adjustments by reducing the budgeted amount in one area to account for the overage in another. If you’re still having challenges, then your budget probably needs an overhaul. A good financial coach will be able to help you review your budget and identify any potential problem areas and offer you solutions to overcome those challenges. They will give you peace of mind as you work your plan and can often save you significant time and stress by showing you a better alternative. A small investment in yourself, by hiring a financial coach, can pay rich dividends in the future!

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