HOW TO RECOVER THE BUDGET AFTER AN OUT-OF-CONTROL MONTH

HELPFUL TIPS TO RECOVER THE BUDGET WHEN THINGS GET OUT OF HAND

We’ve all been there; gotten a little into the Christmas spirit, had a bit too much birthday… but that’s no excuse to give up where budgeting is concerned! Now is the time to right the ship before it goes even further off course. Here are a few tips.

RECOVER THE BUDGET BY STARTING WITH AN HONEST ASSESSMENT

First, you have to figure out where you went wrong to get it right going forward. And be honest with yourself; did things get out of hand because of outside forces or was it all your own doing?

If things got out of control due to a visit from Uncle Murphy (remember Murphy’s Law, if things can go bad – they will) you weren’t prepared for then it’s time to beef up the emergency fund. If you don’t have one, it’s time to start. You just saw firsthand what can happen when unprepared for an emergency.

If there was no emergency perhaps you just got way out of hand with spending. It happens sometimes. I’ve been there, done that, and I don’t want to keep the T-shirt. You can read more about what to do When the Budget Doesn’t Work and get a little confession from me. Hint – sometimes it’s just you and not your budget that isn’t working. It can happen to the best of us when we aren’t intentional with our finances.

If you spent way more on Christmas than anticipated, now would be a great time to start a sinking fund for next Christmas. Don’t make the same mistake this year; it’s the same day every year so why not be prepared? It’s much better than the alternative.

Look over your holiday spending and determine if you went overboard. This should be obvious within a week or two; kids lose interest in “stuff” fast. When half the gifts are collecting dust in a corner it’s probably safe to say you could cut back a little this year.

Once you create a practical Christmas shopping budget, divide that number by the months or pay periods between now and when you want to start your Christmas shopping. This is the amount you’ll need to set aside every month to meet your goal.

TYPES OF ACCOUNTS TO KEEP NEXT CHRISTMAS UNDER CONTROL

Open a Christmas savings account and deduct a portion of every paycheck as we do, or set up an auto-transfer from checking to a separate savings or checking account.

The latter may be the best option if you shop throughout the year; as penalties are involved once a certain number of early withdrawals are made from Christmas accounts.

How you set money aside and what type of account you keep it in isn’t as important as the fact that you do set money aside! Learn from your mistakes, don’t repeat them.

SET A MORE CONSERVATIVE BUDGET TO HELP RECOVER YOUR FINANCES

If you incur any debt during the out-of-control month, your priority is to pay it off to recover your budget. If you dipped into savings, your priority is replenishing the emergency fund before Uncle Murphy knocks on your door again.

GET RID OF THE HOLIDAY FINANCIAL HANGOVER WITH A NO-SPEND CHALLENGE

It may make sense to do a no-spend month in January to recover your budget as soon as possible. February is also a great month since it is a few days shorter. I have lots of Tips to Survive a No Spend Challenge on the blog.

Kick your bad spending habits or debt to the curb as quickly as possible to recover your budget and get back on track. We do a no-spend challenge every February here at a Life on a Dime, so stay tuned next month for this year’s guidelines. I keep it pretty simple.

If it isn’t in the budget, don’t buy it. It’s as simple as that. Talk with your spouse or accountability partner (these are great to have and keep you in check) regularly about expected purchases or expenses. Build what you can in your budget and table the rest. Prioritize needs over wants.

If something doesn’t fit this month’s budget, try again next month. Chances are you will do fine without it. You can also spread the expense out over more than one month if needed (remember those sinking funds I keep talking about?) Once you have all of your necessary expenses accounted for, look for anything left to put toward recovering from the out-of-control month. Do this as long as it is necessary.

If you want to continue paying off debt or building savings up then press on while you have some momentum! Things get easier when you see the needle move!

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