How to Adjust Your Budget Plan When You Don’t Have an Emergency Fund: 14 Steps

Ok, you’ve had an unexpected expense come up out of nowhere and you feel like it’s completely ruined your day or even month, let alone your budget.

Life is full of surprises, and not all of them are pleasant. When unexpected expenses creep up, it can be easy to feel overwhelmed and unsure of how to manage your finances. Our minds naturally run to any worst case scenario, but instead of dwelling on the negative impact of this unexpected expense, try to shift your mindset and focus on finding a solution. 

So, take a deep breath and remind yourself that you are capable of overcoming this challenge. Setbacks are a natural part of life, and how we respond to them ultimately determines our resilience and strength. 

With a bit of strategic planning and a willingness to adjust your budget, you will find some creative ways to quickly get back on track and maintain your financial stability. 

When I was starting out on my own, I had bought a house by myself. Within two months of owning it my workplace had decided to cut my hours from 30 hours a week to 3-4 shifts every six weeks. Yep, you read it right! If you can imagine, I was losing my mind. For someone who has anxiety on a good day, well, everyday, I went into panic mode. I had two jobs but decided to get another. It wasn’t supposed to be for forever, but I went onto working five jobs and saving as much money as I could for an emergency fund, because I never wanted to feel like I did at that moment ever again. 

Alright, let’s get started!

How to Adjust Your Budget Plan When You Don’t Have an Emergency Fund

1. Immediately cut back on spending until you evaluate where you’re at in your budget

If you’re feeling at all unsure about your finances, a good first step is to immediately cut back on spending until you can really assess where you’re at in your budget. It’s all about being mindful and intentional with your money management. So, don’t be afraid to tighten the purse strings a bit while you get things sorted out! 

2. Evaluate the situation of the unexpected expense

First things first, assess the situation and figure out exactly how much you need to cover the expense. 

Next, look at your financial resources – if you don’t have an emergency fund, do you have any savings for a vacation or something else you can tap into? Or can you rearrange your budget to free up some extra cash? 

3. Review your variable (non-essential) expenses 

Start by reviewing your variable expenses. These are your expenses that fluctuate from month to month, like dining out, entertainment, and shopping. Always keep tabs on these expenses because they can add up real quick and throw off your financial goals. 

Take a look at your bank statements, log into your account or use a budgeting app to track where your money is going. 

Once you have a good idea of what you’re spending, see if there’s any areas where you can cut back or make adjustments. Maybe try cooking at home more often instead of eating out, cut some subscriptions, or find ways to enjoy entertainment that doesn’t cost as much. 

By keeping an eye on your variable expenses, you’ll be able to stay on track with your budget and save some extra cash for that unexpected expense. 

4. Cut back on your variables (non-essentials) in your budget 

Start making adjustments to your budget by trimming down and removing some non-essential expenses for the month. By making small adjustments here and there, you’ll be surprised at how much money you can save over time.

Plus, it’s a good way to reassess your spending habits and see where your priorities truly lie. 

5. Reallocate funds from other budget categories in your budget

Reallocating funds from other budget categories can be a smart move when you need to shift your financial resources around. It basically just means taking money you had for one expense and putting it towards another that may need more funds.

6. Explore opportunities to lower some of your fixed expenses as well

Fixed expenses are those recurring costs that you have to pay every month, like rent or mortgage, utilities, and insurance premiums. Try shopping around for cheaper insurance options, renegotiating your cable or internet bill, or finding ways to lower your energy consumption at home. By taking a closer look at these expenses and seeing if there are ways to reduce them, you can potentially save some money each month.

It may take a bit of time and effort, but the potential savings can really add up over time. 

7. Revise your budget with the new expense 

Now that you’ve cut some non-essential expenses for the month from your budget, add in the unexpected expense. 

8. Will you be able to stay out of debt with your revised budget plan?

If you can, that’s great! You’ll be free and clear from your unexpected expense within a short month. 

If you answered no…

9. Do you need to increase your income for a month?

If the unexpected expense is significant, you may need to look for ways to increase your income temporarily. 

Consider picking up some extra shifts at work if possible or taking on a side hustle like dog walking, pet sitting or tutoring. You could also declutter your home and sell items online or hold a garage sale for some quick cash. Try to find ways to monetize your skills.

Just remember, it’s important to prioritize paying off that unexpected expense as quickly as possible so you can get back on track financially. 

10. Consider taking out a loan or using credit

If the unexpected expense is too large and you can’t come up with the money, you may need to consider borrowing.

You may need to take out a loan, use credit or remortgage your home to pay for the expense.

Be sure to carefully consider the terms and interest rates before making this decision. 

11. Add the loan amount into your budget

So, you’ve got yourself in a bit of a pickle with an unexpected expense that’s piling up and you need to take out a loan or use credit to cover it. 

The important thing now is to come up with a solid plan to pay off that debt and avoid getting buried under interest payments. 

Sit down and assess your current financial situation again – figure out how much you owe, what the interest rates are, and how much you can realistically afford to pay each month. 

Consider cutting back on non-essential expenses or finding ways to increase your income to free up more money for paying off the debt if you can.

Set up automatic payments if possible to ensure you stay on track, and be sure to stick to your plan of making payments. 

12. If you’re feeling stuck and don’t have a loan or credit

If you’re feeling stuck and don’t have a loan or credit, it’s a good idea to talk to someone at your bank or credit union. They can offer advice and assistance, such as helping you secure a loan with a lower interest rate than a credit card.

Another option is to consult with a mortgage broker. They have the expertise to help you find a low-interest loan or refinance your current mortgage at a lower rate than what your financial institution may offer.

Don’t hesitate to reach out for help when you need it! There’s always an answer to every problem.

13. Track your income and expenses diligently 

Keep track of how well you are sticking to your adjusted budget plan. Make any necessary tweaks along the way to ensure that you are staying on track to cover the unexpected expense while still meeting your financial goals.

Try to be flexible, realistic and patient. 

14. Prepare for future unexpected expenses

Lastly, use this experience as a learning opportunity to prepare for future unexpected expenses.

Think about setting up an emergency fund or setting aside a specific amount each month for unexpected expenses to lessen the blow of any future financial surprises. Creating a little extra wiggle room in your budget will help set you up for financial success in the long run.

“As long as you stay positive and proactive, you will find your way through this temporary obstacle.”

-The Unscripted Femme

Thank You Credits: Photos by Karolina Kaboompics on Pexels.