Oops! I Blew My Budget. Now What?
There are months when sticking to your budget is easy. And inevitably, there are months when you manage to blow your budget and come up short. Especially if you don't have an emergency fund, any unexpected expenses like a car repair or medical bill can blow your budget at the beginning of the month.
Whether it's due to spending too much or an unexpected expense, it's stressful to realize that you are out of money and still have several days or even weeks until you get paid again. Here's what to do if you come up short.
How Do I Cover My Remaining Expenses?
If you have blown your budget, the first thing you need to do is reduce the amount of money that you spend each day. Depending on how tight your budget is, you may need to stop all spending completely.
You will want to take measures to cut back on the amount you spend at the grocery store. Try to create meals from the food you already have in your pantry. Also, bring your lunch from home to work.
You should also think about the difference between necessities and luxuries. If it is a luxury, then you need to skip it for the rest of the month. You may also consider cutting back on items that you would normally consider a necessity. This change can make a big difference in how long it takes you to recover from a financial mistake.
If you find yourself with a serious money shortage situation for one month, you may have to get creative about making ends meet.
Try taking up a temporary side gig, like driving for Uber or delivering food. You may also be able to get part-time work from friends and family cleaning houses, doing yard work, or running errands.
Consider selling items you have on Craigslist or other resale sites. Extra furniture that you don't use or want clothing, shoes, and even jewelry can be good items to sell to make some extra cash.
Should I Use a Credit Card?
Using a credit card when you blow your budget can be dangerous. If you are still coming up short on your remaining monthly expenses, you may not have a choice. For example, if you do not have enough money to cover food for the month, then you may be forced to use a credit card. But if you do, remember to buy everything as cheaply as possible, and skip eating out or any extras, since every penny you spend, you'll have to pay back—with interest.
An alternative to using a credit card is to call your credit card company or student loan company and request a temporary forbearance or delay of payment due dates until you're back in the black. Many companies will do this if it's not a regular occurrence.
Remember: if you use your credit card to help bridge the gap, you should also have a clear plan on how you will pay the debt off in the next month or two.
Prevention is Key
If you find yourself in a pattern where you consistently run out of money each month, you need to change your budget, your spending habits, and potentially even figure out how to earn more money.
If unexpected expenses like a car repair keep throwing you off, an emergency fund should solve your problem. An emergency fund allows you to cover the expense without affecting the rest of your budget.
If you find yourself blowing your budget on clothing, eating out, and other unnecessary things, you need to consider whether you have spending issues you need to address. You also need to decide if your budget is actually working. Often people who struggle this way do not have a budget at all. You can also look for new ways to save each month to cut down on your overall expenses.
Adjust Your Budget
If you find yourself consistently running out of money each month, then you may need to rework your budget.
The first thing you need to consider is if your budget is realistic. For example, if your budget line item for groceries is $100/week and you are consistently spending $150, you need to adjust it.
To find out where your budget needs to be adjusted, you'll need to track your expenses. Then you can figure out if you are overspending in certain categories, like entertainment.
Switching to an envelope system can help with these issues. Or, if you don't want to change your spending habits—or you live in an area with a high cost of living—then perhaps you need to look for a job that pays more. Increasing your salary could help you meet your financial obligations each month.
Updated by Rachel Morgan Cautero.