How to Budget When Your Expenses Are More Than Your Income

What if your expenses are more than your income? What is the point of budgeting if your expenses are more than your income? This is how to budget when your expenses are more than your income.

If you are not making it each month and struggling and living paycheck to paycheck, why bother putting it down on paper and actually KNOWING the numbers? It will just make you depressed and won’t change anything. After all, if the math doesn’t work, then the math doesn’t change just because you wrote it down. Facts are facts. If there is no money, then there is no money. Right, right?!?


Money management is not about math. It’s not about the numbers. It’s about the feeling that you have towards your money. And budgeting gives you CONTROL. Being in control is empowering. Being in control gives you options. Being in control makes you the master of your money and your life, and not making money the master of you.

That Being Said, What Do You Do When Your Expenses Are More Than Your Income?

What do you do when your expenses are more than your income?

Creating a written budget will give you an exact number of the shortfall you deal with every month. Then you can create a game plan to make that number smaller.

What if the outlay is actually more than your inlay?

How does writing it down help with that? How will anything change?

Budgeting is not a magic wand that will suddenly make your paycheck larger or your expenses smaller.

But you will KNOW YOUR GAP.

What is your gap?

Take all your expenses and add them up. Take all your income streams and add them up. Subtract.

This shortfall, this number is your gap.

Once you know how big your gap is, then you have a goal. Once you have an actual, specific goal, then you can make a plan to work towards that goal. You may not be able to close the whole gap but what you can do is work towards is CLOSING THE GAP. You can work towards making sure that the gap is smaller and smaller. You can make absolutely sure that the gap never widens and never gets bigger.

Closing the gap is not an easy prospect, but you actually have a fighting chance once you know what the gap is.

Once you realize what the real numbers are, then you can figure out a plan of action to make that difference smaller and smaller. You can lower expenses or raise your income. You work on getting that number closes and closer together, so it is as small as possible.

Paying down debt or building a nice emergency fund is usually a good start and a good way to free up some money.

When you are dealing with specific numbers, then specific actions have meaning. Those small, frugal actions and sacrifices that do nothing and just make you feel demoralized and poor? That $20 that you save in your purse but still seems to have to go to something?

When you are working towards a specific goal, then those sacrifices MEAN SOMETHING. Choosing to cook instead of getting take-out isn’t just saving $30. It is taking $30 and using it to pay down debt, which will make your future more secure. Or it is $30 that is going into an envelope to pay for school fees, so you don’t need to put it on the credit card AGAIN, and you are making sure your gap does not widen. It’s $30 that you are using for everyday expenses, so your expenses aren’t $30 more than your income. It is all about the gap.

Figuring out how to make extra money and then PURPOSEFULLY and MINDFULLY spending or saving it can do wonders for your budgeting, debt repayment, or savings.

Once you know your income and expenses, you can work towards either lowering your expenses or increasing your income.

Lowering your expenses can seem like a thankless, difficult task with a little reward if you view it as “cutting back” or “doing without,” but when you re-frame it as closing the gap, then instead of feeling downtrodden, and resentful you will feel empowered, powerful and IN-CONTROL.

When you view something as a problem that needs a solution, then the opportunities are endless. Solutions can be found. You can be creative and purposeful. Maybe you need a new job? Maybe you can put in extra hours? Maybe you can start a side-hustle? All of these are options that can be considered when you know how MUCH money you need to make it work. If you only need $300 more a month, you can start a tutoring business on the side (for example).

If you need an extra $10,000 a month, you may need to move and find a better-paying job- maybe by learning a trade, getting the extra certification, or going back to school. These are only solutions if you actually know the real problem. And the real problem is a precise number. And numbers can be manipulated and changed.

Are you clueless when it comes to your finance? The Basic Guide to Budgeting and Personal Finance will help you get started.

Hi! I am a millennial mom with a passion for personal finance. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.

3 thoughts on “How to Budget When Your Expenses Are More Than Your Income”

  1. It’s really fantastic to see a post written like this! Too often, it seems that a lot of the “just make a budget!” advice implies that once you make a budget, your overspending/underemployment/etc will be cured instantly. Thanks for putting this together!

    • Thank you! This has been formulating in my mind for some time as I know so many people who keep on asking “Why should I budget?” if I know the numbers don’t add up. There is a value in budgeting even if you aren’t going to find “extra money” or curb spending.


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