No one wants to go over their budget. Unfortunately, it can happen for a variety of reasons. Some are simply beyond your control, such as a job loss or unexpected medical expenses. Others may be the result of carelessness, like overspending on a vacation. But no matter what busts your budget, the important thing is to get it back on track. Here are 5 tips to fix your finances:
Cut Back on Spending
The first thing you need to do when you bust your budget is to stop the bleeding. Put the brakes on any spending that isn’t essential until you can figure out how to get things on track again. Start by looking for ways to cut back so you can replenish the funds you lost. Low-hanging fruit like cable TV costs and going out to eat with friends should be the first things to cut out. If you have issues with self-control, consider asking someone to serve as an accountability partner, and hold you to a strict spending regimen.
Reassess Your Budget
A budget is designed to keep your money on track, so if you’re busting it, there’s something off with your calculations. If you’ve gone over budget for anything other than an emergency, spend some time reevaluating your expenses. Check to see if you are underspending in any categories. You may be able to move some funds around to cover areas of overspending.
Start an Emergency Fund
Starting an emergency fund is great idea to help prevent budget busting in the future. Most experts suggest you keep at least three to six months of expenses in an account, but start by adding whatever you can afford. Create a savings goal each month to get you into the habit and set up an automatic payment to your savings account when you get paid to make it easier. And whatever you do, DON’T dip into the fund unless you have an emergency.
Put Money into Targeted Savings Accounts
Opening targeted savings accounts is a smart way to split your money for specific objectives, such as vacations, home repairs, car repairs, medical bills, etc. Organizing your accounts this way can serve as a good motivator for saving and budgeting because you’ll be able to prioritize your goals. For example, if you plan to go on a big trip this fall, you might stop putting money away into your car repair fund and add more into your vacation fund. Many people put all their money into a single savings account, which can make it harder to figure out how much you have saved for each financial goal. With targeted savings accounts you’ll be able visualize your savings better and have a clearer picture of when your budget may be in trouble.
Take on Part-Time Work
Consider taking on a part-time job, or getting a side gig to help bounce back from a broken budget faster. Many people are even able to turn a simple side hustle or hobby into a business that can be run out of your own home.