How to Reset Your Budget Gone Wrong

In total honesty…we fell off the budget wagon some time at the beginning of May. I could make a ton of excuses as to why that happened, but we all know that life happens, right?

…and sometimes the budget just doesn’t make the cut.

How to Reset a Budget Gone Wrong

The good news? Our budget is back and ready to take July by storm. In that spirit, I thought I’d share a few tips for resetting a budget, especially after you’ve almost given up.

Determine It’s Necessary

It’s necessary. Need I say more?

It’s easy to get to a state of complacency and feel like what you are doing is working, even if it’s not. At the beginning of May, I didn’t really think it mattered. Honestly, we had money in savings and enough of a buffer that we could spend what we wanted (reasonably) and not have to worry about it. With medical bills piling up and a long stay in the hospital, it was just easier to pay for things and not worry about categorizing them.

Fast forward six weeks, though, and we started to get nervous. Did we really have enough money to pay the car payment? Were we going to overdraft if we made our sixth trip to the grocery store for the week? It became a game of roulette in that, we ran the card and once again, just hoped that the screen read “approved” when it was all said and done.

A budget is necessary. The quicker we made that acknowledgment, the better we felt and I’m certain you will as well.

A Fresh Start

You know how you feel on January 1st when you’ve made the pledge to do something completely new with your life? I know that I always feel as if the upcoming year is going to be the best when it comes to my exercise routine, savings, and even our debt payoff plans.

And yet…when you’ve fallen off the wagon, it can be tempting to give up until New Years, when you will once again feel guilty about the progress you DIDN’T make, while hoping that you will gain some momentum the following year.

The best part is that you can reset at any point. At the date of this blog post, it’s July 1st, and that means it’s the perfect time to give yourself a half-yearly fresh start.

Now… I know you worked hard on that budget. I know that because I did as well, but if you’ve been away from it for two months like we have, then it’s safe to say that the budget wasn’t and isn’t working for you. It’s time to modify and start again.

Personally, I believe in a fresh start with no regrets, just like you’d give yourself with a New Year’s resolution.

Revamp Those Goals

As with all New Years’ resolutions, you must have a goal. Sure, your goal of debt payoff, saving a certain amount of money, or investing for retirement might have been the perfect goal for the earlier part of the year, but it might not be the same thing you are willing to work for at this moment.

In our case, our goal of debt payoff was (and still is) a high priority, but for the final half of 2019, we will be placing the focus on our savings. It’s never been that way for us before, but after several major medical scares this year, it’s time that we prioritize the long-term financial security of our family. Once we’ve done that (and paid off all of the medical bills) we’ll get ourselves back to the task of paying down the debt.

The great part is that we saw so much progress on the debt payoff front during the first few months of this year and managed to refrain from adding anything to those debts over the time we were “off our budget”. That alone is a huge success in my mind and one worth celebrating.

Clear All of the Categories

Whether you use paper and pencil, the Blessed Budget Planner, or an online app to track your budget, the best thing to do at this point is to clear the entire budget.

I mean it.

Even if it scares you a little (or a lot), eliminate each category. By doing so you will be able to put together an entirely fresh budget that will meet the needs of you and your family going forward. This keeps you from adhering to a budget that may or may not have been effective for you in the past.

Of course, if you have monthly budget items such as your mortgage or utility bills, it’s probably safe to leave them there as you definitely will need a place to live, among other things.

Now REALLY Start Fresh

Once you’ve cleared everything from your budget as well as any “accumulated savings” that may or may not have been tracked correctly, it’s important to determine how much money you have left.

To do this, I waited until almost all of the transactions for the month (June) cleared our bank account and we received our income for July. Then, I allocated ALL of the remaining money left in our accounts to the income category of our budget.

Sure, it makes our budget for the month look like we have an incredible amount of income but in reality, much of that money will be allocated to our emergency savings, vacation fund, and household maintenance fund, as it should have been before.

By following this process, you’ll be able to clearly see HOW MUCH money you currently have and know with certainty that it’s there when you need it.

Add Your Categories

Take the time to put your categories back into your budget. Make sure to account for groceries, household expenses, spending, and any other monthly expenses you are responsible for. Determine whether you need to make an “expense” into a “fund” or if the payment amount remains the same from month to month.

Prioritize Savings

In our case, we’ve chosen to prioritize savings going forward. Specifically, we want to have three to six months’ worth of expenses in an account.

Of course, that may not be your goal. Either way, when you cleared your budget categories, you should have cleared your savings funds as well. That means that you have this opportunity to redistribute funds to those categories. Funds to consider:

In our case, we recognized that we had our emergency fund still intact (super exciting!!!) and that we had enough money to add a bit to our savings and household maintenance funds. No matter what your circumstance is, do your best to focus on those things that matter the most to keeping your family budget working going forward.

Tip: Grab my Emergency Savings Fund template HERE.

Celebrate the New Beginning

Once your budget is back into play then it’s time to celebrate. You might spend the week between Christmas and the New Year contemplating how to succeed with that new goal, and yet, when the clock strikes midnight, it’s game on, right? This should be no different. Celebrate with champagne or some leftover and slightly freezer burnt ice cream and pat yourself on the back for a job well done.

This next month will likely come with its share of challenges, but you and that new-to-you budget are ready to take them on.

Here’s to a great one!