People are generally becoming more savvy with their money and understand the importance of controlling their spending by keeping to a budget to minimise their debt. However, this doesn’t mean that even the most financially responsible families don’t experience financial challenges. So it’s important to learn how to manage your overspending when it happens.
Unfortunately, once your household budget has been blown, it gets easier for additional failings to occur. It’s like being on a diet and having a piece of cake. Many people will think, “Hell, I’ve already blown my diet. I may as well have two pieces of cake!”
It would be better to admit that things get off course occasionally and to have a plan of action to deal with it to mitigate the problem. No matter how careful we are things can happen out of the blue to wreck most budgets. But if going over budget is becoming a regular occurrence then the situation needs addressing and money worries can also seriously harm your family relationships, so don’t delay.
Consider these four budget fixes to help you get back on track:
1. Ensure your budget is realistic. Budgets require knowing where money is being spent, and how much. When making a budget, it’s easy to incorrectly estimate how much you spend on different items. Appearance and reality often collide. If you feel your budget planner isn’t up to the job you can download an excellent version here.
* Until you have some real data to use, build a buffer into your budget to protect against overspending. You can use money from the buffer category to offset the difference when you overspend in one area.
* Over time, your estimations will improve and the buffer category can be 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 shirt or a $200 shirt. That’s flexibility. Eating out is similar. You could find a cheaper restaurant or not eat out at all.
* It’s quite easy to cut back in these areas if another category has been overspent. Eat in instead of going out. Download a movie at home instead of going to a concert.
3. Don’t delay asking 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. 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 borrowing are generally expensive and inflexible choices and can be difficult debts to eliminate. These options often result in additional rounds of seeking similar solutions. The amount of debt you owe can keep increasing all the while leading you into a downward spiral of despair.
However, obtaining a short-term personal loan can be a sensible solution in certain circumstances, provided the repayments are affordable and offer some flexibility. Defaulting on interest payments can harm your credit score and make taking out any future loan, such as a mortgage, more difficult. Therefore, it’s important to do your research to fully understand all the terms and cost implications before committing.
* Negotiate with your landlord and your utility companies 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 necessary. If you’re consistently coming up short, your budget probably needs to be adjusted. It might be that your income doesn’t permit the targets you’ve set in the more discretionary categories, such as social spending.
* If you’re still struggling, keep track of everything that you spend for a month, even the spending of your loose change. Track everything. Then ask yourself how this compares with the budget you’ve set. Identify the problem areas.
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 shifting the allocation from one category to another. If you’re still having challenges, then your budget needs re-examining. So get your budget under control to help reduce your stress levels and to afford more of what you really want.
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