There are a number of situations where you might find yourself having to make budget adjustments to help you sustain your lifestyle and way of living. You could be preparing to make a big purchase and find the need to re-allocate your income towards that goal. It is also a possibility that your family is going through a medical scare that left your finances vulnerable. Then there are times when you or your loved one loses a job.
Being let go at work is one of the worst situations you can find yourself in. There will be a part of you that starts to question your skills or even your purpose in life. This can lead to serious depression and anxiety since you do not have an idea where you should go next. As much as you are in limbo when it comes to personal growth, you also start to worry about your finances as well.
At the back of your mind, you know that you need to make some serious budget adjustments to help you weather this storm in your life. You could mentally be starting to look at all the payments you make in a month. You begin to wonder where you will be getting the money to pay for all of them. When you start to include all your recurring expenses, the total amount starts to become a big financial challenge.
The bigger that amount is, the higher your stress level can be. It is bad enough that you were let go at work and if you add the stress of meeting your regular budget, your stress level goes higher. Top Resume site shares that this depressing end can happen to the best of us. If you find yourself in this situation, there are a number of things you can do to help you get past this financial challenge.
Check on your emergency fund
The first thing you need to do even before thinking about making budget adjustments is to check on your emergency fund. This is one of the reasons why you have that fund in the first place. Your emergency fund is supposed to step up to the plate when you find yourself in these types of situations. This is the reason why you save up for it over the years.
Your emergency fund is supposed to help you get through big challenges in your life and losing a job certainly fits the bill. The question now is how strong is your emergency fund is and if it can do the job. You might be coming from another emergency from a few month’s backs and your fund might be depleted.
Budget adjustments start with a good audit of your income and expenses
Now that you have an idea of how much your emergency fund is, you also need to make sure that your budget is in order. This is an important part of the process since you will rely mostly on your household budget to make immediate decisions. The data that you have on your budget will be your basis as you try and navigate your way through this financial ordeal.
That being said, you need to make sure that your budget paints an accurate representation of your income and expense levels. If you are highly dependent on just a single income every month, the income side of your budget is relatively easy to adjust. You now have to start working on your expenses. This is a key ingredient to help ensure that you can continue on with a modified lifestyle.
One thing you need to add to this equation more than just your emergency fund is other available savings you might have. This is not so you can start dipping into all of them from the beginning. Creating this list helps you understand the bigger picture. It can also help you lower down the stress you feel knowing you have some back-up funds in case unemployment drags out. This is important as CNBC shares that a survey revealed that about 53% of Americans feel anxious when thinking about personal finance.
Start cutting back on expenses
One of the biggest budget adjustments you would have to make when you are forced into a single-income household is your expenses. As you have done an audit on your budget and have a comprehensive list of what you spend every month, it is time to start weeding through. The objective is to come out with a lower expense total every month.
There are a lot of ways to go over your expenses and one of them is looking at the items you can live without at the moment. It can be a gym membership, multiple music streaming subscriptions, or even that weekend fund you set aside so you can buy new items every week. Instead of going to the gym, why not go out for a run or look for free classes at the park? It does not mean that you have to give up a lot of things. This only forces you to look for ways to get them at a lower cost.
Food can also be one of your biggest cost items every month but the thing is that you cannot totally wipe it out of your budget. You need food to survive every single day but you might still be able to lower down that expense item. If you notice that you order take or delivery often, why not learn how to cook? It does not only lower your cost but it also ensures that you and your family get to eat healthy meals. Cutting back expenses does not have to be a painful process but a creative one that forces you to think outside the box.
Begin the search for a new source of income
While you are making budget adjustments in terms of your expenses, you also need to make sure that you begin looking for a new source of income. Though it would be great if you can sustain the positive changes in your budget, the fact remains that you need income to survive. Your emergency fund can only sustain you for a limited amount of time. After you have exhausted this fund, you might start getting into serious financial debt just to survive.
The first thing you could focus on is updating your credentials so you have a document you can send out to companies in the industry you worked in. Start reaching out to your professional network to get a feel of job openings in different companies. This can help you send out your credentials to businesses that are looking for people which increases your chances of getting hired.
One way to look at this situation also is that it might be the perfect time to jumpstart that business idea you have or using your hobby to earn some serious money. Since you have more free time, why not use that to put up your own business. You can dig into the feasibility of your idea and test the market on how they would react to your business. It is also a good use of your time to start marketing your skills and make sure that you earn from your hobby.
Take on a frugal lifestyle
As you adjust your budget to cope with the sudden dip in your household income, it is a good idea to look into a frugal lifestyle. You might have a challenging time since some people as a negative approach to saving money. However, it is actually a creative approach to managing your finances. For one, taking on a frugal approach means living below your budget and looking for ways to save money.
Much like how it is more cost-efficient to cook your own meals at home, the same can be done with other areas of your finances. Rather than use the car going to and from work every day, why not take public transportation or better yet, use a bike. Not only does it save you money at the pump and slow down the depreciation of your vehicle, but it also keeps you healthy as well. Frugality is identifying creative ways to help you save money.
There are a lot of budget adjustments you need to look into when you find yourself in a single-income household but you can make it work. You just need to come up with a plan and stick to it until you see results.