Believe it or not: Personal budgets don’t always work as planned. They can be confusing to put together, and hard to stick to. Occasionally even the best budget plans go off the rails. All you have to do is get back on track!
So, say you’ve gone through this entire process–you tracked your income and expenses, broke down your expenses into categories, set budgetary goals, and did your best to stick to the plan and avoid budget busters–and your budget still falls apart; where do you go from here?
Get to the root of the problem
- Did you forget to include a fixed or frequent expense?
- Did you budget get derailed by a friend asking for money?
- Did an emergency expense catch you off guard?
- Have you not set up automatic payments yet?
If you’ve forgotten to include an expense, add in that expense, and see if your budget is negative or positive. If it’s negative, it’ll take a little effort to make it positive. Try these ideas:
- Drop another varying expense – use public transportation a few times a week to lower your gas costs
- Pay a tad less on each of your loans each month – look into refinancing
- Lower the deposit amount to your emergency fund or other savings accounts
Friends and family members
A friend or family member who asks for money almost always puts you in a tricky situation. My rule of thumb is to only lend out money if I don’t care whether or not I get paid back. However, I know others who are more generous with their income. Friends and/or family members asking for money can really dig into your budget. But if you want to lend out money, e sure to make room for it in your budget!
Part of having a solid personal budget includes building up an emergency savings account. An emergency fund is a crucial part of a strong financial plan because it keeps you afloat after you get laid off, get into a car accident, get evicted, have your phone stolen or have a medical emergency. And if your emergency fund isn’t fully stocked (and, maybe even if it is), you may be paying expenses out of pocket for weeks, months, or even years.
This is going to throw your budget way off. If your budget is the largest loss from your emergency, your only challenge afterwards is rebuilding your emergency fund. The only thing you can do to prepare for an emergency is have a healthy savings built up to cover emergency expenses.
Automate your personal budget
Setting up automatic payments, transfers and direct deposit puts your budget on autopilot. You can have a part of your pay divided up and sent to your savings, checking or special savings account when you choose direct deposit. For example, you could have $20 dollars of each paycheck sent straight to your emergency fund.
In most cases, you can also put your bills on autopay. If you have rent, loan payments or credit card bills, most of those can be paid automatically online helping you avoid late fees. Automating your bills allows you to work with and track a smaller slice of your budget each month.
If any of those situations got your personal budget off track, the fix is easy. You simply need to adjust your current budget. There is no need to start over!
If you drained your emergency fund, it’s time to go back to the drawing board and start over again from scratch. Your emergency fund needs to be built back up. But that’s okay! If you created a top-notch budget once, you can do it again.
Get extra help
If you’ve been adjusting your budget and it’s still not working, stop in and see us at Dane County Credit Union. A well-established budget that’s fallen off the rails shouldn’t be a hassle to get back on track. But, if sticking to your personal budget is not working, our experienced staff is happy to look at your budget with you.