You’ve done the work and created a family budget to estimate your monthly expenses and calculate the income that comes into your home each month.
There’s a catch: You’re constantly strapped for cash every month, or you’re always spending too much money on items, from groceries to entertainment to travel.
These are signs that you need to adjust your budget because the one you created doesn’t accurately reflect your expenses or income.
Do not despair. Recognizing that your budget needs to be adjusted is the first step towards creating a family budget that really works for you, leading you to financial stability.
Here are five key signs that you need to adjust your budget, which can reduce your financial stress.
Too much credit card debt
One of the main signs that your budget needs an adjustment? For Sacha Ferrandi, co-founder of Source Capital Funding in San Diego, Calif., This is when you can only make the minimum required payment on your credit card each month.
If you have a balance on your credit card from month to month, it’s a sure sign that your budget isn’t realistic enough to accommodate your spending habits.
âIf you’re relying on your credit card to spend, it’s time to re-evaluate your household budget to avoid raising interest rates and, ultimately, getting into more debt,â Ferrandi said.
What if you can’t even cover your minimum monthly credit card payment? So your budget is really broken, Ferrandi said.
Ferrandi recommends that if you can’t make your credit card payments each month, you immediately start building up your savings and including those dollars in your monthly budget.
âSetting aside even a small amount of money is the first step towards a healthy family budget,â added Ferrandi. “This will ease the stress of monthly credit card payments, while providing flexibility on necessary spending.”
David Jozefiak, president and certified financial planner of Next Degree Financial, based in Sterling Heights, Mich., Agreed that carrying any credit card debt month to month is a sign that the budget is your household needs to be reorganized.
âOne of the first warning signs that you need to adjust your budget is that you don’t pay off your credit card balance every month,â Jozefiak said. âPeople usually pay all of their bills first and the last to be paid is the credit card. If you don’t have enough to pay off your balance, you may be spending more than you earn, and you may need to make some adjustments to your budget.
Treat savings as an afterthought
Your budget should include money set aside each month to be deposited into a savings account. If it’s not the case ? Then your budget needs help.
Sean Fox, co-chair of Freedom Debt Relief in Phoenix, Ariz., Said savings should never be relegated to what you’re going to put aside if you have money left over at the end of the month.
âThe savings should be a mandatory ‘bill’ in the expense section of the budget,â Fox said.
This is true even if you can only afford to put in a small amount of money each month. Even though you can only deposit $ 100 into your savings account each month, include those dollars in your budget and make sure that at the end of the month you save them.
It’s too rigid
Mitchell Hockenbury, a financial planner at 1440 Financial Partners in Kansas City, Missouri, says a lack of flexibility is another sign that your budget needs work.
As Hockenbury said, “life is coming”. So your budget cannot be so tight that one unforeseen expense blows it up. You’ll need some wiggle room in a solid family budget.
But the flexibility also means you should be able to pursue a new hobby, take a short trip, or go out for a fancy birthday dinner without your budget for the month falling apart.
âWhen you decide to take a course, start a sideline, or go for the weekend, you should be able to transfer money from one expense category to another,â Hockenbury said. âFixed expenses like mortgage or automatic payment are not flexible. But you should be able to tap into a savings, dining, clothing, or entertainment category to slip the money into your new category.
If your budget is so tight that you can’t adjust to your new lifestyle choices, your household budget isn’t working, Hockenbury said.
Pay bills – even one – late
Have you fallen behind on your monthly automatic payment? Didn’t you have enough money last month to pay your utility bill?
It’s a sure sign that you need to adjust your balance, perhaps cutting back on optional expenses like going to the movies, eating out, or buying new clothes. First you need to focus on paying your monthly bills.
âMore people spend more money on interest and late fees than on many other expenses,â Fox said. âA sure sign is that you are behind on all monthly payments. “
Do you stay awake at night wondering if you’ll have enough money in your bank account to pay off your mortgage? Are you worried that a utility bill is coming up as well, preventing you from paying for your car?
That’s a lot of financial stress to put up with. And that kind of stress is a sure sign that you need to adjust your budget and therefore your spending.
Brad Ruttenberg, co-creator of The Money Twins, a financial education site, said too many people are living on paychecks and struggling with debt. These are sure signs of a budget that is out of control.
If you care about money each month, take a more realistic look at your true spending habits and actual monthly income. Ruttenberg said you should also set goals for yourself. It can range from building an emergency savings fund of $ 1,000 to saving enough money to make that long-awaited trip to Paris.
âMaintaining a budget is difficult,â said Ruttenberg. âIt’s so much worse when there is no motivation. Goals motivate. You need to know your needs, your wants, and most importantly, your goals.
Ruttenberg recommends that you work with your spouse or partner to assess where you want to be financially in the next five to 10 years. If you don’t, you will likely create a budget that is too unrealistic to work.
When did you realize you needed to make a change and implement a budget? Let us know in the comments below!