You were doing so well. You planned your budget, you've even started paying off credit cards. Now, just like that..you've slipped up again. You've spent more than you have. You fell behind, or you purchased something you probably shouldn't have. Well, it happens. So here are some great tips on how to get back on track.
Regaining control of your household budget after an unexpected major expense may not be as difficult as it seems. Here are six steps to take.
Everyone has the best intentions when it comes to personal finances, but things happen that can derail you. Whether it’s an unexpected home repair, a job loss or even credit card debt that’s become unmanageable, it’s important not to let a financial problem spiral out of control. While getting back on track can feel like a monumental task, it doesn’t have to be—if you follow a plan.
1. Get back to basics
Try to get your day-to-day spending in check while you work out the rest of your finances.
Use cash instead of credit cards to buy things.
If you use credit cards, make sure you can pay off your purchases immediately.
Create shopping lists for groceries and personal care items so you don’t make impulse purchases.
Before you make a purchase, ask yourself if it’s necessary. Sleep on it. If you really need it, you can always go back to buy it.
Track your spending to see where you might be able to cut back.
2. Make a list
Sit down and write out your financial stress points. Money problems can seem like those cartoon snowballs, rolling downhill, gathering speed and size, and making everyday financial transactions seem overwhelming. Instead, try to break your financial problem into two or three actionable steps—for example, you could aim to pay off credit card debt you incurred dealing with your emergency and work to replenish your emergency savings fund.
Tip: If you’re juggling multiple debts, come up with a strategy for how to tackle them.
3. Revisit your household budget
You’ve probably made a household budget, but it may have been awhile since you updated it. Now is a good time to do so, keeping the problems you outlined in step No. 2 in mind. If you started tracking your spending as part of step No. 1, that’s a good start. Don’t forget to take into account your regular bills, as well as expenses that might happen sporadically—for example, haircuts or school supplies.
Next, take a careful look at nonessential costs, including everything from entertainment to hobbies, and consider how much you want to spend. You may decide to deprioritize some of those nice-to-have things to tackle the problems you’ve outlined. See whether you can free up some money to put toward getting back on track. If finding a balance between saving and paying down debt is a challenge, we’ve put together five questions to help you.
4. Use technology to help
Sometimes the stress of dealing with your finances can be overwhelming, making it hard to get started or stay on track. Technology can be helpful. You might consider using available budgeting programs or apps such as mobile banking to help you monitor your spending and prioritize your goals. An app can help you track your progress, keeping you motivated.
You might also want to automate your goals. If you’re dealing with credit card debt, you might try using automatic bill pay to help you pay it down. If you’re trying to replenish your savings, setting up an automatic transfer to your savings account each month might help.
5. Make it a team effort
Explain to family and friends that you are trying to stick to a budget. Having encouragement and support can help you stick to your goals. For example, if your friends know you are trying to cut back, they may suggest a movie night at home rather than a trip to the theater.
6. Remember that it’s okay to slip up
Mistakes happen. After all, we’re only human. Just try to make sure that it’s not too often and nothing over the top. Going to dinner somewhere special for your anniversary makes sense. Going on a European shopping vacation because it’s Tuesday doesn’t help you get back on track. If you splurge a bit, see whether you can set aside a little extra the next time you get paid. Steer yourself back on course and you’ll see progress again before you know it.
Disclaimer: The content on this site is provided for information and discussion purposes only. It is not intended to be professional financial advice and should not be the sole basis for your investment, financial or tax planning decisions. Under no circumstances does this information represent a recommendation to buy or sell securities, or any other products, or services. All content and information is subject to change at anytime.