Five Ways to Bounce Back from a Busted Budget

broken train tracks
Getting your budget back on track can seem insurmountable. Photo: Archives New Zealand

It happens to the best of us. Everything is going great, then all of a sudden, something knocks your budget completely off track.

It can be anything, really – a sudden job loss that drastically reduces your income, a surprise home repair, or a medical issue. And depending on the severity of your budget crisis, the impact can last for months – or even years.

At the moment, this feels like the story of my life. For two months in a row now, my own family budget has gone directly down the tubes. In May, our water heater busted and we had to get a new one. A day and $650 later, we had hot water and a budget that was proportionately in the red.

Then this month, we had a surprise air conditioning repair bill to the tune of $1,100. I was not happy. But the bad news didn’t end there. A few days after that, we lost a few bricks on our chimney and had to pay someone $900 to rebuild it. Again, I was not happy.

Unfortunately, busted budgets are an inevitable fact of life. If you have a house, kids, a car, or do anything other than sit in your house all day, you’re exposed to risks and repairs – and some of those things can cost money.

Five Ways to Recover from a Busted Budget

But that doesn’t mean you should admit defeat and stop trying. Busted budget aside, you can still be a budget hero the other 90% of the time. Here’s how:

1. Open targeted savings accounts

If you want to prepare for various types of emergencies, it might be smart to open targeted savings accounts and start tucking money away. For example, you could start one for any event that happens fairly often – things like home repairs, car repairs, school supplies, or medical bills.

Opening separate accounts for all of these expenses might be the best way to start preparing for each of them – even if you can only stash away small amounts of money at first.

2. Build your basic emergency fund

Another tool that can help you weather any financial storm is an adequately funded emergency fund. Most experts suggest you keep at least three to six months of expenses in an account you can get to easily, but you may need more or less depending on your situation.

If you want to start building your emergency fund but don’t know where to start, start small. Even $50 per month can add up quickly if you contribute regularly. Just make sure not to touch it unless you have a true emergency.

3. Analyze your monthly budget

If you keep going over budget for reasons other than an emergency, it might be wise to reevaluate your budget altogether. My husband and I did this a few years ago when we kept going over our grocery budget. After some thought and planning, we bumped it up $100 per month and haven’t gone over since.

Remember, a budget is meant to keep you on track, but you shouldn’t set yourself up for failure. Sometimes you might just need a little more wiggle room to make it work.

4. Look for ways to cut back

If you’ve overspent on home repairs or other emergencies recently, you might want to look for ways to cut back so you can recoup those funds over time.

For starters, look for the low-hanging fruit. Things like your grocery spending, cable TV bill, and entertainment spending are generally easy to curb. And you never know – you might actually enjoy your life more without all of the “extra” expenses.

5. Try to earn some extra cash

Cutting back is great, but there’s another way to create the same effect – earning more money. If you want to find a way to recover from that $1,000 hospital bill or furnace repair bill, you could always look for ways to earn the money you lost.

Maybe you could start a side hustle in your spare time, or perhaps you could build a full-fledged side business out of your own home. Either way, there are endless ways to make some extra cash. Mowing lawns, babysitting, and tutoring are great ways to get started making extra money, just to name a few.

Recovering from a Busted Budget with Style

Let’s face it – busted budgets are part of life. In fact, the only people who never experience a busted budget are the ones who have no idea where their money is going in the first place. Trust me, you don’t want to be that guy.

Yep, the fact that you even know your budget is messed up means you’re already ahead of the game. So don’t let a crazy month or two ruin your finances completely. Just get back on the wagon and keep trying – no matter what.

Have you ever had a busted budget? What kind of surprise bills have you endured lately?

Holly Johnson

Contributing Writer

Holly Johnson is a frugality expert and award-winning writer who is obsessed with personal finance and getting the most out of life. A lifelong resident of Indiana, she enjoys gardening, reading, and traveling the world with her husband and two children. In addition to The Simple Dollar, Holly writes for well-known publications such as U.S. News & World Report Travel, PolicyGenius, Travel Pulse, and Frugal Travel Guy. Holly also owns Club Thrifty.