Straightforward Remedies For Long-Term Budget Deficits
When it comes to managing money, there is one particular occurrence that no one wants to experience: a budget deficit. Simply put, a budget deficit means that you have more money leaving your accounts then you have coming into them.
There are various causes of budget deficits, but the vast majority are short-term, usually incurred in a particular month due to an unexpected expense. The best way to protect against these short-term budget deficits is to build an emergency fund that you can dip into as and when needed, but this does leave the question…
What about long-term budget deficits?
Many moms find that their budget deficit is not caused by a short-term, unexpected expense; instead, it’s an ongoing problem that occurs month after month. Despite being careful with funds and trying to stay organized, they are consistently spending more than is coming into their account.
What are the consequences of long-term budget deficits?
The consequences of long-term budget deficits can be severe and, in almost every case, will usually involve some level of debt being sustained. Also, and in addition to the financial consequences, long-term budget deficits can be outright harmful to your mental health, as you have to constantly worry and move money around to try to compensate for the shortfall.
As a result, if you notice your budget is continually in deficit, it’s well worth tackling the problem head-on in an effort to find a solution.
How can you resolve long-term budget deficits?
It’s important to note that no single resolution works for everyone, and you may have to experiment with different ideas and possibilities to find the right answer for you. To get you started, here are a few ideas:
- Cutting your costs is the usually the best solution for long-term budget deficits; and there are a variety of ways in which you can do this, so it’s well worth exploring your options to see what might work for you.
- You could also look to increase your incoming money, perhaps with a part-time job or a side hustle.
- It’s also helpful to see if your budget deficit is being caused by another person or company; perhaps your former partner is not paying child support as they are meant to, or a company is consistently overcharging you for their service. When you identify these issues, you can then look for resolutions, such as obtaining a child support court order or switching to another provider for the same service.
- If you have existing debts, see if you can lower the monthly repayments. The most common way of doing this is via consolidation; you could apply for a loan with a low interest rate, and use that to settle your existing debts. You could also look to see if there are any balance transfer deals that could allow you to lower your monthly repayments on credit cards.
A long-term budget deficit can cause genuine problems both now and in the future, so if you notice a shortfall that lasts for more than three months, it’s worth exploring the options above in order to try and find the sustainable solution you need.