The trick to a successful budget is its ability to handle emergencies. You should not go to your emergency fund if you overspend in a category. Instead you should look to your budget to find the extra money. Each month is a little bit different, and it is important to realize that your budget can change to meet your needs. It is important to keep savings and debt payments at the top of your budget. Try to avoid changing these amounts. After you realize that you have overspent in a category or need extra money, there are three things you should do.
First, you need to determine how much money you will need to find to cover the expenses in that category for the rest of the month. If you have overspent on gas money, ask yourself how much money you will need to go to work for the rest of the month. You should try to cancel unnecessary trips to conserve money and gas. If you have overspent on groceries then cut down your grocery list to the bare essentials. You may not be able to eat steak every night for the rest of the month.
Second you should look at the categories in your budget that you can cut back on. You need to pay your rent and utilities, so you should live these alone. You may want to look at your fun money, clothing, eating out, groceries, and gas categories. These are the ones that you can decide how much you spend each month. Decide how much you can cut back on in each category this month.
Third you will need to subtract that amount from each category. Then you will add that amount to the category that you need extra money in. You can keep transferring until you cover your expenses in your category. If you are using the envelope system, you will simply move the money from envelope to envelope.
What You Need
- Running Expenses List