Watch for these signs that it’s time to tweak your current budget to make it work.
If you’ve created a monthly budget, good for you. Paying close attention to your income and expenses is one of the first steps toward managing bills, setting aside an emergency fund or saving for milestone life events like buying a house or starting a family.
However, just because your budget looks good on paper or in the budgeting app on your phone initially doesn’t always mean it will work from the get-go. More likely, you’ll need to make adjustments every month or two until you’re meeting your budgeting and saving goals.
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1. You’re always broke
While this may seem obvious, being broke all the time is a sure sign your current budget isn’t working, either because you’re not budgeting realistically or you’re failing to stick to the budget
Don’t despair, though. You can adjust your budget, and it’s never too late to change spending habits to stretch your money further each month.
Find out: How to Create a Budget and Stick to It
2. Your monthly standard of living is lopsided
If you begin the month going out for steak dinners and spend the last week eating ramen noodles in front of the TV, you have a couple of issues going on. For starters, you’re probably not spreading out over 30 days the amount you budgeted for meals and groceries. Second, you may be underestimating food costs.
Try to allot more in your budget toward food or other expenses that start out strongly funded early in the month and become hard to pay later. At the same time, examine your spending habits for groceries and dining out and focus on ways to save money such as using coupons, watching for sales at the grocery store and cooking more meals at home.
Find out: 9 Tips to Save Money on Groceries
3. Most of one paycheck goes toward one big expense
When you get paid twice a month, allotting most of the first paycheck every month to rent or the mortgage payment may seem the natural thing to do. However, if you have an unexpected expense like a car repair that must be paid with that paycheck, you could fall behind on the rent and struggle to catch up.
It’s a better idea to set aside money from each paycheck toward the rent or mortgage payment. That way, you always have some extra money in the bank in case you are surprised with out-of-the-blue expenses for one month.
Find out: 3 Ways Life can Be Better With a Budget
4. You have no emergency savings
If your budget doesn’t allot a certain amount each month to savings, you could be headed for trouble. What if your home air conditioner breaks down or you have to travel unexpectedly for a family emergency? Without emergency savings, even having to spend $100 for a new car battery could throw your entire monthly budget off track.
Ideally, you should have emergency savings to pay for five or six months of living expenses, but don’t give up because you don’t know how you’ll ever be able to save that much. Instead, open a savings account with as little as $100 and then allot a certain amount each month toward emergency savings.
Initially, you might shoot for an attainable goal of $500 or $1,000. Once you meet your goal, adjust your savings target to higher amounts.
5. You never have money for special occasion gifts
Are you the family deadbeat who never has enough money to buy holiday or birthday gifts? If so, you need to budget even a small amount each month for expenses related to special occasions such as graduation gifts or birthday dinners.
If you don’t use the budgeted amount one month, don’t blow it on something else. Transfer the money to your emergency savings instead to use for the next special occasion.
Find out: What Is a 50/30/20 Budget?
6. You incur additional credit card debt every month
If you’re racking up a few hundred dollars in credit card debt every month that you can’t pay off with each statement, it’s time to take a closer look at your budget and adjust accordingly. Take a look at where you can cut expenses so you don’t have to use your credit card?
Maybe you could pause three streaming subscriptions and get by with just one. Could you save money by dining out less and preparing more meals at home? Maybe you could save on utilities if you focused on keeping costs down.
Try to adjust your spending habits and monthly expenses so you can avoid charging expenses on a credit card that you could pay with cash or a debit card if you budget accordingly.
Published by Debt.com, LLC