What to Do When Your Budget Doesn’t Match Reality


No budget plan is perfect. The reason it’s called a budget is because it is merely a projection of how you should spend to meet your financial goals. But as it always does, the unexpected happens.

So what if your budget doesn’t match reality?

This can particularly happen when you underestimate your resource allocation or undervalue your expenses. Emergency situations are also a factor—you can’t delay, for example, the repair of your machinery.

So what to do when your budget falls short?  That’s what this post will reveal.

There are three critical periods to consider: before, during and after.


Why wait for it to happen? As they say, “prevention is better than cure.” That same line finds application when you prepare by setting aside a “contingency fund.” Start building this fund by saving a small percentage of your monthly earnings.  This way you won’t break your budget when emergency strikes, because you’ve already factored it in.


As you progress through the month, find time to review your plan and check if a budget deficit is looming. When you see a problem on the horizon, start adjusting your expenses by cutting down on your resource utilization or looking for cheaper substitutes. This way, you can stay faithful to your projection without sacrificing your production level.


If you find that it’s too late and the budget deficit is materializing in your face, you can still do something. If adjusting your expenses is not possible, try increasing the other side of the equation—your income. Go after your receivables and press on collecting from people who owe you.  Another alternative is to induce people to buy your products in advance at a discount. This way, you are able to earn before you actually deliver the items. If all else fails, short-term credit may be the answer. If you’ve developed a good working relationship with your supplier, arrange for a credit accommodation by allowing you a grace period. Negotiating a short-term loan with your bank is also an option.

Whichever is applicable to you, make sure to always put in mind your long-term financial goals so you don’t get distracted by short-term difficulties.

Which of the above-mentioned options have you done in the past?

For a FREE one-on-one Financial Health Check-Up to find out how healthy your business’s finances are, CLICK HERE.

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