How do we manage our finances when things are not going well? Here are some ideas for realistically budgeting when life is coming at you fast.

Many people find creating a budget and sticking to it challenging even in the best of times. Sadly, most people’s lives are not entirely smooth sailing. Sometimes normal life turmoil is good, like preparing for a wedding or welcoming a baby. At least as often, though, the water is rough for less happy reasons: an illness or death, job loss or other trauma.
 

1. Be Realistic about your Budget

No matter what the circumstance, budgets only work if you’re realistic. If you’re in the middle of turmoil, it’s likely that some of your expenses are going to go up. You’ll probably want to eat out more and/or buy more prepared foods, and in general will be (rightfully) making choices that are more convenient but also more expensive. If you’re expecting turmoil in the future or are in the midst of a crisis right now, adjust your budget accordingly, so it reflects the fact that you might, for example, want a house cleaner for a couple months after having twins, even if that’s a luxury you don’t usually budget for.

2. Adjust Expectations

Once you’ve examined your budget realistically, see how you can change your spending and saving habits to keep yourself sane. Do you need to save less for retirement while your spouse undergoes cancer treatment? Slow down your student loan repayment while helping your parent move into an assisted living facility? There’s nothing wrong with adjusting your financial priorities as you deal with a temporary crisis. In fact, if you are handling a crisis of any kind, from a new baby to a cross-country move to an illness, focusing on saving for the future is not the healthiest approach.

3. Look for Major Economies

If all you need to do to get yourself through a crisis is reduce your savings for retirement, you’re probably in a better situation than most. If, however, you aren’t earning enough money to cover your expenses, look for ways to save big chunks of money rather than a couple dollars here and there. I’m talking about getting a roommate, moving in with family, cancelling your cable or selling one of your cars. These are things that will shave over $500 off your monthly budget in one fell swoop. This is because, quite honestly, you have other things going on and agonizing about $10 expenditures isn’t a good use of your energy.

4. Use Your Emergency Fund

Emergency funds are there to make emergencies less stressful. Having an emergency fund is the first step towards building financial security. If you’ve spent time building up an emergency fund it can be hard, psychologically, to switch gears and start using it. But that’s what an emergency fund is for, and using it to make your life easier during an otherwise stressful situation is entirely appropriate.

5. Give Yourself a Break

It is okay to hit pause on budgeting for awhile to get through life's emergencies. If you have a $40k medical bill in front of you, saving $20 on dining out this week is pretty trivia and there is no sense stressing over it.  You'll probably see increases in other categories that provide convenience or comforts too and that is okay! However, don't use the $40k medical bill as an excuse to go overboard in every category or buy an extravagant impulse item you wouldn't otherwise.​

Maintaining a budget can be challenging even when things are going well, but it’s even more important when times are rough. Managing your finances and budget during a crisis often means relaxing rules you’ve set for yourself about spending habits and using money to make life easier. The key, though, is to be self-aware enough to understand that a crisis can’t be permanent.

Need help with your budget? Check out Wealth Meta’s Budget Tracker.