Zero in on a target, and then start setting money aside.
Zero in on a target, and then start setting money aside. (photo: Jupiterimages/Comstock/Getty Images)

There's no wakeup call like seeing your spending in black and white.

— Gail Cunningham, Spokesperson, National Foundation for Credit Counseling

A flexible budget might sound like an oxymoron. Isn't the whole purpose of a budget to keep you on the straight and narrow, with all your bills and expenses locked into a rigid structure that doesn't allow for wiggle room? After all, it's all that wiggle room that resulted in the need for a budget in the first place -- wiggling into that new outfit, wiggling into that great sports car, wiggling into that booth at the hottest new restaurant.

But even the best budgeters sometimes run into snags and find themselves trying to wiggle out of an emergency without enough cash in reserve. It doesn't have to be that way, though. Add some flexibility to your budget and an unforeseen crisis becomes a crisis averted.

Building a Budget

If you haven't gotten your budget in order yet, that's obviously the first place to start. Gail Cunningham, spokesperson for the National Foundation for Credit Counseling, recommends tracking your spending for 30 days first -- and that means everyone in the household.

"It's very boring, yet very necessary," she said. "There's no wakeup call like seeing your spending in black and white."

After 30 days, Cunningham says your family should get back together for a "family council" to examine where the money is going and where adjustments need to be made. You should then decide on a spending plan and track spending for another 30 days. Continue to tweak until you've got it right. And it's important to keep including your family in the discussion as you tweak.

"A lot of people want to shield their children from financial issues," Cunningham said. "But consider it a teachable moment."

Financial adviser Susan H. Brown of Sound View Financial Advisors, LLC, agrees that tracking spending is the way to go.

"In my experience, you can't follow a budget if you don't keep careful records of where your money goes," Brown said. "Also, I think many people find that as soon as they start tracking their expenditures, those expenditures decline immediately, because when people see that they've spent $25 in the last week for coffee, they begin to ask whether that's a sensible expenditure or whether the money might be better used elsewhere."

Brown's advice? Get a pocket notebook and write down what you're spending, as you spend it, on a daily basis.

Finding Flexibility

If your budget feels more like a straitjacket than a flowing caftan (and you don't need either, even if they're on sale), build in that wiggle room by taking the money from those unnecessary expenditures you have identified right to the bank. Then open a savings account with them.

"If you build an emergency fund, you have budget flexibility," Brown said. "If you 'fall off the wagon,' you can pay that credit card bill that's higher than it's supposed to be. The trick is getting back 'on the wagon' the next month. Any time you tap your emergency fund, you should rebuild it as soon as possible."

Your total savings should grow annually, she says. Build your emergency fund to six to 12 months of spending needs. Then start building an emergency fund for your emergency fund. To do so, consider opening an investment account in addition to your savings account, which at that point should be plush with a year's worth of spend in it.

Take It Off the Top

No matter how practical it sounds, however, establishing an emergency fund could be slow going, particularly if you're not used to paying yourself.

If that's the case, financial adviser Delia Fernandez of Fernandez Financial Advisory, LLC, suggests that you enlist a little help from your employer and your bank to handle what she calls those "big bills" -- the periodic expenses that can be shocks to your budget. With payroll deductions, the money goes directly from your boss to the bank -- before you can get your hands on it and wiggle some away.

"Calculate those big bills and begin now to put money aside for them, preferably through payroll deduction to a separate account," Fernandez said . "Divide the expense by your number of annual paychecks and arrange for a withdrawal every check."

If after the deductions, your paycheck comes in at an amount that you can't live on, you may be spending too much, she says. But if your stub still offers a livable wage, then consider taking it a step further.

"Calculate an emergency fund amount and a 'big fun' amount [for splurges]," Fernandez said. "Arrange for that money to be taken out of your paycheck the same way -- and preferably deposited into another account, separate from the 'big bills' account. Credit unions can be very agreeable in helping you open these individual savings accounts."

Finding Funds for Fun

"Cutting back is always better than cutting out," Cunningham said.

For example, if you find that your family is ordering pizza four times a week, don't give up pizza -- just order it once a week instead. And if you don't really watch all those 100-plus channels on your expensive television plan, don't forgo television -- just find a plan that incorporates the channels you do watch.

"Everyone needs to build a little 'fun' spending into their budget," Brown said. "Depending on the size of your budget, this might have to be a very small amount, but at least allow some extra for impulse spending or entertainment. Everyone needs to reward themselves sometimes, and everyone faces spending temptation all the time."

Brown compares spending to dieting, explaining that it's important to realize imperfections and that accounting for setbacks is part of finding success.

Pilots & Professionals

"If there's a silver lining to the recession, it's that we have been forced to move back into the driver's seat," Cunningham said."We've been on automatic pilot."

We've often been spending as if we'll never hit the ground. And when it finally happens, it can be anything but a smooth landing. If your finances are no longer your friend, it might be time to seek professional help.

There are more than 800 community-based consumer credit counseling offices located in all 50 states and Puerto Rico that offer the services of certified counselors, along with books, free workshops and other services, all under the auspices of the National Foundation for Credit Counseling.

When should you consult a professional?

"Sooner rather than later," Cunningham said. "When it becomes burdensome to you. When you're not sleeping well or distracted by your debt."

So if you truly need help, don't try to wiggle out of it on your own. Consult a professional and wiggle back into the driver's seat -- where you are in control of your debt.

  • Photo Credit Jupiterimages/Comstock/Getty Images
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