Quick Fixes When You've Blown Your Budget

Most households are doing much better at managing their finances as economic growth and median income improve. However, that doesn't mean that the most financially responsible family wouldn't face financial challenges from time to time.

Unfortunately, once your household budget has been blown, it gets easier and easier for additional failings to occur.?It's like being on a diet and having a piece of cake. Many people will think,?"Heck, 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 then right the ship.

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

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

• ?Until you have some accurate 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 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 easy to cut back in these areas if another category has been overspent—eat in instead of going out. Rent a movie instead of going to a concert.

3.???Avoid waiting to ask for help.?When folks 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 advances can be burdensome debts to eliminate. 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.
• Negotiate with your landlord, loan and/or utility provider 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 needs to be adjusted. It might be that your income simply doesn't permit the targets you've set in the more discretionary categories, such as entertainment.

• If you're still struggling,?keep track of every cent 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?\

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 facing challenges, your budget probably needs an overhaul. Get that budget under control and reap the rewards!