What should you do if planned expenses exceed expected income?

• A. Borrow from a lender to cover the shortfall.
• B. Spend more on nonessential items.
• C. Reduce discretionary spending, avoid using credit, and seek ways to increase income.
• D. Ignore the shortfall and hope it improves.

Answer: (C)

When planned expenses exceed income, the goal is to bring the budget back into balance by trimming spending that isn’t essential, avoiding new debt, and looking for ways to increase income. Start with discretionary spending—the nonessential items and activities you can live without for now—because cutting these typically doesn’t affect your ability to meet essential needs and can quickly close the gap. Avoid using credit to cover the shortfall, since borrowing adds debt and interest, making your financial situation harder to recover. At the same time, seek ways to raise take-home money or available cash, such as overtime, a side gig, selling unused items, freelancing, or negotiating a pay increase, while keeping essentials funded. If necessary, you can also adjust fixed costs or use savings temporarily, but the emphasis is on balancing the plan without increasing debt. This approach directly reduces what you spend and increases what you bring in, which is the most sustainable path when expenses exceed income.