How to get back on track with your budget.
You put time and effort into creating a budget but somehow, you overspent. It can be discouraging to miss the mark, but recognizing that you made a mistake is the first step toward getting back on track. Here’s how:
Take a look at your spending.
Chances are, you’ve overspent on the variable expenses in your budget. These can be harder to estimate than fixed expenses. Pinpointing the types of purchases that derailed you is the first step toward sticking to your budget next month. Start writing down your daily purchases in a small notebook, often called a spending journal. Are you spending too much on lunches out at work? Do you go overboard ordering music on the Internet when you’re bored? Next month, try to avoid situations where you tend to overspend. And ask yourself if you really need each purchase before you make it. Delay and postpone!
Do a reality check.
Maybe you exceeded your budget because you held yourself to a standard of frugality that isn’t realistic for you right now. For instance, you may have planned a rock-bottom food budget but found that ordering a take-out pizza once a week was a sanity-saver on nights you had to work late. If that’s the case, you may want to add occasional take-out purchases to your food budget but cut back on something else.
Look for ways to save on fixed expenses.
Make sure you are getting the best deal on your utilities, cable and telephone services and banking by calling your providers to see if they’ve introduced new plans or deals. Some will do a free usage analysis to help you. Also consider getting rid of some fixed expenses entirely, such as a car insurance payment for a teen-age child who is capable of getting a part-time job and paying this bill directly.
Make some tough decisions.
Some people don’t stick to their budgets even after losing a job because they can’t accept the reality that they can no longer afford to live the way they once did. You may feel ashamed that you have to cut back, especially if certain luxuries are typical for your social circle. But if you continue to live in a way that you can’t afford, you will rack up debt and put your family at financial risk.
Money Management Tip # 1
Never let your checking account balance dip below $100 and you'll reduce your chances of paying overdraft fees from your bank.
Get an outside perspective.
It can be hard to recognize when we are caught up in mental traps that work against us financially, so asking a frugal friend or family member for advice may be helpful. Or, get a free budget analysis from a credit counselor at a nonprofit agency. Contact the Association of Independent Consumer Credit Counseling Agencies (www.aiccca.org) or the National Foundation for Credit Counseling (www.nfcc.org) for a referral.
Take action now.
Review your spending journal today to see which purchases blew your budget. If you stopped keeping track, start again now. It may be inconvenient to write down your purchases, but once you make it a habit, it will help you get your spending under control.
What's next? Treating savings as an expense