Do you find yourself struggling to stay under your budget and saving money each month? This happens to all of us sometimes, but there can be a time when we’re truly having a hard time not overspending most months, and when that happens, we need to take specific steps to remedy the situation. In this post, I’m going to go over what to do if you’re having a hard time staying under your budget.
1. Revisit Your Budget
The first thing you should do if you’re frequently going over your budget is to revisit it. To prevent yourself from going over your budget each month, first, make sure your numbers are correct.
Are you reporting all of your income? Are your expenses accurate? When in doubt, create a budget from scratch.
Go through each item on your budget and check your bank and credit card statements to verify that your expenses are how you’re recorded them.
If you still find yourself going over your budget, then it’s time to take some action to get your financial situation under control.
2. Cut Back on Discretionary Expenses
The first expenses to tackle are your discretionary expenses. Are you going out to eat too much? Did you spend too much on your last vacation?
Oftentimes, most people go over budget because they aren’t properly tracking their spending with their fun money. It’s time to reel in that spending on going out, on memberships, and frivolous purchases with your credit card.
Should you stop having fun? No, of course not – but you must draw the line somewhere and cut back in order to prevent yourself from going over your budget in the future.
If cutting back on your discretionary expenses isn’t helping as much as you’d like, the next step is to go on a spending freeze.
3. Go on a Spending Freeze
Stick to your budget by going a spending freeze. A spending freeze is when you go for as many days as you can without spending a dime. One effective way to go on a spending freeze is to pay all of your bills on the first of the month, and then not spend any money until you absolutely have to, such as to pay for groceries or fill up your car with gasoline.
A benefit of going on a spending freeze is that it encourages you to be disciplined about your money. A typical spending freeze may last one or two weeks. In that time, you may be able to save hundreds of dollars, if not more.
To go on a spending freeze, take these steps:
- Decide how long you’ll go on the spending freeze for.
- Get your spouse and children in agreement.
- Any money that needs to be used should be used at the beginning, such as for paying bills.
- Remove your credit and debit cards from your wallet and put them somewhere safe.
If you’re still having trouble staying under your budget, the next step is to negotiate your bills. This will lower your monthly living expenses, which may help you overall.
4. Negotiate Your Bills and Cut Back on Utilities
Many service providers will work with you if you call in and ask for a lower rate. You might only be able to do this once a year or less, but if you have a good reason and try back a few times, you might save a few hundred dollars or more across all of your bills. You can use that extra money to pay down debt, buff up your emergency fund, or invest for your future.
Some common bills that you can negotiate include:
- Auto Insurance
- Homeowner’s Insurance
- Credit Card APR
When attempting to negotiate your bills, always be polite yet firm. You can share that you’re in a tough financial situation, or you can say that you’ll be taking your business to a competitor that offers a better rate. You can also ask how they can help you lower your bill as you are a loyal customer.
Most service providers will work with you as keeping you as a customer is important to them. Customer acquisition and retention cost companies a lot through marketing and advertising, and if keeping you means charging you a little less each month for a period of time, they just may do that.
You can also cut back on common utilities such as:
If you’re curious about exact ways to save on your utilities and negotiate your bills, I wrote a post about it here.
5. Find Another Source of Income
If you’re still going over your budget too frequently, the next thing you can do is raise your income. If you’re working a job where getting more hours isn’t possible, you need to find another source of income.
The best way to get another source of income is a side hustle! There are tons of side hustles you can take on, whether short term or long term, daily or one day a week. You can also start creating passive income streams to give you regular money each day, week, or month.
- The Best Side Hustles You Can Do in 2020
- 12 Brilliant Ways to Make Money Online for Beginners
- 9 Passive Income Ideas for 2020
While side hustles create income right away, they do take more of your time. Creating passive income is much slower and can require much more effort, however, once a passive income stream begins, it can pay you for life.
For example, I use Lending Club to create a passive income stream where I’m paid most days of the week. On average, I earn $2.50 per day in passive income from Lending Club. That may not seem like much, but if you scale it out, that’s $75 per month or $912.50 per year.
Wrapping It Up
Effective budget planning benefits you in so many ways. When you are unable to stay under your budget, you may hurt your savings account and drown in debt. By employing the above methods, you can better get back under budget and free up some money. You can then take your freed up money and pay down debt, save for an emergency, or invest for the future.
Until next time!