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How do you balance your budget?

If you find any of your budgets (needs, wants, or savings) having a negative balance, do not panic. There are many different strategies that can help bring your budget from a negative to a positive.

How do I balance a budget?

Having a negative balance in your budget means that the income you brought in was not enough the cover the expenses. To tackle this problem you can either try to increase your income or reduce your expenses. Even better if you can accomplish both.

Increasing your income

Most often people think that the only way to increase an income is to find a better-paying job. That is most certainly the most common way, but other strategies can also help. Here are some ways to increase your income:
  • Ask for a raise or more hours at your current job.
  • Look for extra jobs or chores that you can do for money, such as babysitting, mowing lawns, or selling crafts.
  • Sell things you don't use or need anymore, such as clothes, books, or toys.
  • Save your change and cash it in at a bank or a coin machine.
  • Ask for money or gift cards as a gift for your birthday or other occasions.

Decreasing expenses

When it comes to expenses, some expenses are easier to decrease than others. Expenses that are the same every month, such as your rent, car payment, insurance, or cell phone bill, are known as fixed expenses. These expenses are pre-determined by somebody other than yourself, like a bank or a company. Changing these expenses typically involves certain negotiations with the company or bank itself, and not all negotiations result in expense reduction.
Other expenses, such as some utilities, groceries, or shopping can vary from month-to-month, and are called variable expenses. You have a lot more control over these and they are much easier to decrease.

Ways to save

Some ways to save money on expenses are:
  • Compare prices and look for discounts or coupons before you buy something.
  • Avoid impulse buying, which means buying things you don't need or didn't plan to buy.
  • Use less water, electricity, and gas to lower your utility bills.
  • Borrow, swap, or reuse items instead of buying new ones.
  • Pack your lunch instead of buying it outside.
  • Choose free or low-cost activities for fun, such as reading, playing games, or going to the park.

Shifting the funds

A short term fix to a negative budget balance is to simply move funds from the budget balance that was positive into the negative one. For example, if your savings budget balance was negative, but your needs budget balance was positive, you can take the extra money from needs and move it onto savings. Note that this is only a short-term solution, and we should really try and figure out the cause of the negative balance.

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