shutterstock Your budget has gone off the rails this month. Actually, it seems like it goes off the rails most months. Somehow, you just never seem to have enough to cover all of your expenses. What are you doing wrong? There are several common causes of chronic budget failure, as well as several common remedies you can use to change course. Here's are five ways to set things right: 1. Use a System You're Comfortable With If you hate budgeting and dread doing it, it's no wonder you're having trouble making it work. You need to find a system that feels intuitive and easy-to-use to encourage you to spend time working on it. You may find you prefer using an Excel spreadsheet and entering in purchases from receipts you save. Maybe you'd do better with a program that automatically tracks your purchases for you and sorts them into preset categories. Or maybe you'd prefer to have a "two-category" budget: pull your savings from the top and spend the rest. There is no right or wrong system; all that matters is that yours works for you. 2. Start From Where You Are You can't do anything now about your shortages in past months. All you can do is resolve to spend money more conscientiously in the future. You may need to cut your budget categories for a few months to make up the difference, or you may need to get rid of few expenses so you can pay off any credit card balances you've incurred. You may not enjoy declaring a moratorium on all restaurants, cutting cable, and trading your 2-year-old car for an 8-year-old vehicle, but you need to be realistic about your current situation. You might be spending beyond your means. Don't beat yourself up too much; you're on the right track now. Resolve to start living below your means, rather than above it, and keep your focus on the future. 3. Trim the Fat Certain budget categories are more flexible than others. It's hard to lower your housing costs without a lot of hassle, but it's relatively easy to reduce your dining out budget or your clothes and shoes shopping. Reduce your spending in the easiest spots first. You know you need to buy groceries, for instance, but can you cut the cost by shopping with a list, planning your meals in advance or using the same basic ingredients in multiple meals? Do you really need to eat out each weekend, or can you dine out every other weekend so this money can go toward other expenses? Once you start trimming, you'll be surprised to find out how much extra room you really have. 4. Factor in Irregular Expenses Unexpected expenses are the easiest way to derail a budget. Make sure your budget accounts not only for your regular monthly bills (such as your mortgage/rent, gasoline, utilities, etc.), but also for bills that come on a quarterly or annual basis, such as gym memberships, magazine subscriptions, association dues, club memberships or even the quarterly water and sewer bill. Total up the yearly cost for these irregular expenses and divide by 12 to determine how much you should be setting aside each month for them. 5. Build Up Your Savings You should have, ideally, three to six months of income saved in case you need to deal with a big sudden expense like an illness or an accident. Even if you can't set aside a ton right now, start building your cushion. Try this: increase your savings by 1 percent this month. If you're currently saving nothing, save 1 percent. If you're currently saving 4 percent of your income, save 5 percent. Spend a month adjusting to this new budget. I bet you'll hardly feel the difference. Next month, increase that by another 1 percent. And the following month, add 1 percent more. Within a year, you'll have increased your savings rate by 12 percent. That money can be used to pay off your debts, pay cash for your next car, make a down payment on a house, or build an emergency fund. Congratulations. Your budget is now back on-track.
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