8 signs your budget needs an overhaul

One of the most essential and important steps in organizing and keeping track of your finances is creating a budget. Everyone's monthly budget looks differently. It expresses who you are as a person, what you value, and your financial and life goals. That being said, your budget isn't something you can establish once and forget about.

Life is unpredictable and your circumstances can change in an instant, which usually means so do your finances. When life changes, your budget usually needs to change as well. However, it may not always be obvious to you at first that your budget needs to be altered. Thankfully, there are ways your finances alert you to a budgetary error.

Here are eight signs your budget needs an overhaul.

1. You Survive Paycheck to Paycheck

If your account at the end of every month is drained and find yourself anxiously awaiting payday, it's a flashing, red sign that your budget needs an overhaul desperately.

If you don't have any income left over at the end of the month, it's unlikely that you have much that you can put into savings or set aside for necessary, emergency expenses. Sit down and really track where your money goes each month. You'll likely find a place or two where you could cutback to add some extra savings and eliminate the worry you feel as each month comes to a close.

2. Credit Cards are Your Savior

Credit cards are great for building credit and a necessary part of being financially healthy. Unfortunately, there are many cases wherein credit cards are used as a last resort. If you find yourself turning to your credit cards to cover necessary expenses, your budget is probably not working.

At any given time, you should only use 20 to 30 percent of your credit limit. If you're forced to constantly use them in a bind, you're probably using much more and could possibly be hurting your credit score. That being said, if you find yourself falling into this habit, it's a sign your budget needs an overhaul.

3. Your Salary has Changed

This is a fairly obvious one, but still a major financial change to be aware of. If you've lost your job, been demoted, or received a promotion and salary increase, your budget needs an overhaul. Whether you've had an increase or decrease in salary, even a small amount can make a world of difference. A decrease in salary ultimately means you'll have to cut some things out, where an increase could mean more towards savings and retirement funds.

4. You Keep Using Your Savings

Your savings fund is set up for a purpose, to ensure you have a good nest egg for the future. It's usually meant to be set aside for a later date and left alone so it has opportunity to accumulate interest and grow in value. Unfortunately, many people chose to prematurely dip into their savings when they find themselves low on cash or in a bind. It's a bad habit that only serves to harm you in the future, which is why if you find yourself consistently doing so, it's time you revamped your budget to keep it from occurring.

5. You Have New Expenses

Whether you have a new member of the family, have new bills to pay, have recently moved, or took out a new loan, you may need to add a new category to your monthly budget. If you've acquired any new expenses, it's important that you revise your budget to include them. Doing so will not only ensure those expenses are covered, but will also help keep you from running dry in other categories as well.

6. Your Goals Have Changed

As your life progresses, there are bound to be new life and financial goals you hope to achieve. You are also likely to achieve various goals throughout your life, which means you'll start over with a new goal at some point. It's unlikely that you'll want to or be able to keep setting aside the same amount of money you did for one goal for another. Take the time to carefully plan out how you're going to achieve said goals and then incorporate that plan into your budget.

7. You Notice Unhealthy Spending Habits

Do you constantly find yourself dipping into money set aside for other expenses to cover a different expense? For example, maybe you find yourself always going over your clothing or entertainment budget every month. Unfortunately, that money has to come from somewhere. This means your either taking from another budgetary category or spending money you might not have. Reexamine your spending habits and adjust your budget to either cut back in other areas to accommodate the new value you want to spend, or be prepared to adjust your habits to equal what you set aside in your budget originally for that category.

8. You're Unprepared

Frustration and worry can be key signs that your budget needs an overhaul. Life is unexpected and as such, unexpected purchases are going to have to be made throughout your life. Your stove might die, your car might need repairs, or your house might need a new roof. Whatever the expense, your budget should include an emergency category to accommodate for the unknown. If that isn't the case and you find yourself constantly worried about those unexpected curveballs, then it's time to readjust your budget.

Your budget is an integral part to keeping your financial life healthy. It's also a wonderful tool that helps ensure every expense is covered, ultimately keeping you worry-free. Unfortunately for some, a budget can seem as though it isn't helping at all. This only leads to frustration and anxiety. If you find yourself consistently preoccupied with your finances and unsure each month as to how you're going to pay for everything, a budget overhaul is in order. You might be pleasantly surprised by how much of an impact it can make.

The post 8 Signs Your Budget Needs an Overhaul appeared first on Everything Finance.

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Making your budget work for your lifestyle

"Are you on a laptop all day? Would keeping an excel file or Google doc file help you track your expenses easier? Would it be more convenient to keep an old fashioned pen and paper type of budget? How about keeping a running tab on the fridge so that you are tracking all expenses?

The bottom line is do whatever works for you! Make it as easy as possible for you to stick to your budget by fitting your budget-keeping into your lifestyle." -Everything Finance

Revisiting your goals

"For the few that actually look at their goals again, it’s common to revisit them only at the end of the year. This is a crucial error.  As our circumstances may change day to day and month to month, so will our goals. A lot can change in twelve months, which is why I propose reviewing once a month, or at the very least every three months.

Revisiting also keeps our desires relevant.  It’s helps us remember that we even have them.  Ideas aren’t enough, we must execute.

As the great Thomas Edison said, 'Vision without execution is hallucination.' " -Jiu-Jitsu Finance

Increasing your income

"After you have lowered your expenses, it is time to bring in more income. There are many ways to bring in more income especially during the holiday season. Maybe your full-time gig will let you work extra hours for overtime. In addition, retail stores typically hire for the holiday season. That part time holiday gig could turn into a longer gig...

Retail jobs aren't the only part-time jobs available. There are plenty of other side hustles you can pick up right at home to make extra money like: Freelance Writing, Virtual Assistant, Social Media Management." -Financially Fit & Fab

Turn on your automatic savings

"Another no-hassle way to save is by setting up an automatic transfer to your savings account. By automating your transfer, you're making sure that you don't forget or pay your savings last–and as a bonus–automating your savings means you never "see" that money and subsequently makes it sting a little less.

Two new apps that I am loving lately are Digit (which has a cult following). It automatically transfers money from your checking account you won't miss. I also love Qapital, which has rules you can set to "save the change" from your purchases. I saved over $75 my first month of Qapital, which was really astonishing to me. Click here to give it a try." -Financial Best Life

Develop the habit to spend with cash than card

"To spend with cash is also an actionable way to get out of debt. According to the research on peoples spending with credit cards; it was revealed that those who shop with credit card are impelled to spend more on luxury items because they feel they are paying with “play or fun money”. In other words, people who shop with credit card spends more than required.

Evidently, finance advisors hold a strong stand on this. They strongly advise that people who are working on eliminating their debt should cultivate the habit of spending cash, to avoid being tempted to spend on irrelevant items." -MoneyMiniBlog

Leave your wallet in the car when shopping
"This trick is simple but impactful. When doing any kind of shopping, use cash, and only take the amount of money you want to spend in the store with you. Leave all other cash, credit cards, and debit cards in the car.

This is very powerful, especially when grocery shopping. In addition to the amount you plan to spend, you can consider bringing in a small cushion of a few dollars (in case there are hiccups at the register). You will shop (and spend) completely differently when you only have a hundred dollar bill with you versus a hundred dollar bill and your debit and credit cards.

Don’t give yourself a way to spend more money than you want to — and you won’t." -Hope + Cents

Start and maintain an emergency fund

"There is no fixed formula for how much you should have in an emergency fund. Some school of thoughts say 6 months’ worth is sufficient, some say a year’s worth. Everyone’s situation is different and as such, each strategy should differ. To start however, I would suggest understanding your spending habits, and then implementing a 3-6-9 guideline.

3 Months: If you are single without kids, renting, no car, partially dependent on parents for income or any combination of these factors, start off with a target of 3 months’ worth of expenses for a rainy-day fund.

6 Months: Married, kids under 18, own a house or condo, own at least one car, or any of these combined, the base target should be 6 months’ worth of expenses (if married, base it off the income of the highest earner).

9 months: Self-employed, freelancers, anyone with a volatile job or unpredictable paycheck, 9 months’ worth should be the benchmark." -Investment Conversations

How students should avoid the debt trap
"The easiest way to prevent yourself from falling into the debt-trap is by living within or below your means (that is, not overspending). In addition, it is necessary to do research before getting credit cards (or signing any contract to take on loan/ debt) so that you really understand how it works. As a student, you must learn to treat your credit card with respect.-Investment Conversations
Build a budget and stick to it
"There are many free apps available to help you track expenses, but I always prefer using my own spreadsheets. That enables me to have the most control over what I’m doing. I understand that being able to access your spreadsheet on your phone makes tracking significantly easier, which is why I prefer Google Sheets over Excel. You can download the Google Sheets app and pull up your expense tracker wherever you are to input a transaction or monitor your spending. By combining the expense tracker as separate tabs within the same spreadsheet as the bill tracker, you can have all your finances in one easy-to-access location." -The Budget Boy
Create an automatic savings account for travel.
"Here's how this automated system specifically works for you and your travel fund. Once it's set up, it goes like this:

-Your checking account receives income.

-The next day, your checking account automatically transfers money to a separate (different bank) savings account—aka your travel fund.

-Transfers repeat every month.

-You end up with a big, fat travel fund to see the world." -Take Your Success

Know your interest rates and then lower them
Know Your Interest Rates
If you have anything that you are making payments on every month, you need to know how much interest you're paying. Make sure you know these numbers, too. Ideally, you'll want to pay debts down that have a higher interest rate first. However, there is another school of thought out there that suggests paying the bill with the lowest balance first. I'd say either way is fine as long as you're making progress and as long as the higher interest rate stuff isn't astronomical.

Action: Look at your statements or call the companies to get your current interest rates on all monthly obligations.

Negotiate Lower Interest Rates
If, by chance, you ARE paying astronomical interest rates on any of your liabilities, call and try to negotiate a lower rate. Oftentimes, if you've demonstrated a history of paying on time, the company will work with you to reduce your rate. The only trick is, you have to ask.

Action: Know your numbers and call the companies to negotiate if you're paying high interest rates.
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