Everyone has months where their budgets take a detour and get off track. Whether it’s because of an unexpected expense or a much-needed, unplanned vacation, a hit to your monthly budget can definitely cause stress.

While it may seem challenging to get your budget back on track, there are steps you can take to get your finances in order again without having a significant effect on your long-term financial plan.

Steps to Take After Overspending

1. Give yourself some slack. Don’t beat yourself up over whatever occurred. Life happens – unexpected expenses pop up, and financial mistakes or splurges arise from time to time. While you can’t go back in time and change your decisions or stop the issues from appearing, you can change how you react. Begin by taking a deep breath and start putting a plan in place to prevent it from happening again in the future.

2. Assess what happened. Second, you need to assess the damage to your finances. Review your budget to get a clear picture of where you stand now and identify how far off track you went. Maybe you’re not in as much trouble as you thought, or perhaps you need to understand just how far you went off your trajectory to respond to the situation appropriately. Either way, look at the big picture and begin devising a plan to ensure it doesn’t affect your finances over the long term.

3. Review your financial plan. Whether you’re saving for a new car, a home, your wedding, your retirement, or a big vacation, you may need to readjust your plans a bit. Pulling back on your savings for a few months might be a necessary step to get your finances back on course. Adjusting your timeline and realizing you may not reach that financial goal as soon as you thought could be an unfortunate yet necessary step as well.

4. Revisit your budget. At this time, meeting your current financial obligations should be your top priority. The last thing you want is for your credit score to take a hit due to your financial setback. Look for areas you can cut back, at least temporarily, until you catch up. Whatever changes you make need to be realistic. If it’s not possible to get back on course within a month, that’s okay. Break it up over a few months to make it easier and more attainable. If you set too lofty goals, reaching them may not be possible and stress you out even more. So be honest with yourself and identify areas you can realistically cut back. Adjusting your budget to be more workable for your current situation will allow you to still stay on track with your financial plan.

5. Pad your savings. The best way to recover from a financial setback is by being prepared. Work to build up an emergency fund equal to roughly three to six months of living expenses. While this may seem like a lot of money to put aside, you can use tools at the credit union to help accomplish this goal.

With Payroll Deduction, you can set up a certain amount to be automatically transferred to your emergency fund each time you get paid. Or you can set up an Automatic Transfer, which works similarly to Payroll Deduction. However, instead of waiting for your paycheck to hit your account, you pick a date each month for the transfer to your savings to be made.

By having an emergency fund in place, should the situation arise again, you’ll be prepared and able to continue to meet your financial obligations without any setbacks. Instead of worrying about making ends meet, your focus will shift to simply replenishing your emergency fund – which can take place over a more lenient timeframe.

6. Learn from your mistakes. Veering off course from your financial plan happens to everyone. The important thing is to learn what caused the financial setback and prevent it in the future. Whether it was unexpected expenses or stress-shopping, maintaining a proper emergency fund is the best way to protect yourself from future setbacks spiraling out of control.

We’re Here to Help!

While getting off of financial track can cause undesired stress and frustration, understanding what caused the detour and quickly taking the proper steps to get back on course is necessary. 

Your first step is to be proactive in your budgeting by utilizing the many credit union products and services available. Whether you’re looking to set up payroll deduction to jumpstart your emergency fund or need to discuss other options, such as a short-term loan, we’re ready to help.

Please give us a call at 202-479-2270or email us at members@agfed.org to get started today.