How to Make a Budget Work after a Financial Downfall

by Lynnette Khalfani-Cox, The Money Coach on September 29, 2011

in Budgeting


Whether you had to deal with some unexpected medical bills, maxed out your credit cards to cover expenses, or faced some other type of financial blow recently, it’s time to rework your budget.

Managing a budget after a financial downfall can be tricky, especially if you are strapped for cash and used up your emergency fund. You might be feeling less confident about your ability to handle money after a financial downfall, and might not even know how to create a new one.


Use these tips to make your budget work after a financial downfall:

  1. Start over. Your old budget probably won’t be able to cover some newer expenses so now would be a great time to rework your budget. Make sure you’re accounting for any new expenses and changes in income. Remember that your budget needs to be as accurate as possible or you could end up facing another bad financial situation.
  2. Create a new bill payment schedule. If you had to open up a new credit line to take care of some unforeseen expenses, or you just need help making at least your minimum payments on your credit cards, get your due dates in order so you don’t miss a single payment. Create a new bill payment schedule or calendar that coincides with your new paycheck. Consider talking to creditors about adjusting your interest rates or monthly payment so that you can keep up.
  3. Adjust your emergency fund contributions. A financial downfall often means less money available for savings. If you were previously putting some of your paycheck towards an emergency fund, you might need to reduce this contribution to make your budget work. Make some adjustments so that you have enough to cover all of your basic expenses before you contribute to a savings account.
  4. Look for ways to increase your income. If you can’t make any changes to your lifestyle and your expenses seem out of control, the only way to balance your budget is by increasing your income. Consider getting a part-time job, selling some assets to generate some cash, or even consider a career change or job change so you can earn more. This may not be a quick-fix solution, but can put you in a better financial position after a financial downfall.
  5. Be comfortable paying only the minimum for a while. Even though it’s not a good idea to make only the minimum payment on credit cards for extended periods of time, you’ll need to pare down your payments as much as possible until you can get your budget on track. Remember that this new budget may be temporary and you can always

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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

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