So, you spent a lot of time creating the "perfect" budget. However, perhaps you forgot to include some of your expenses. Or an emergency popped up that you had to take care of. You went over budget for the month. Now what?
First, if you are new to budgeting don't beat yourself up. It can take some time (and practice) to figure out exactly how much you should spend in various categories. If you're like me, you tend to underestimate how much you spend and it will several months of tracking real expenses to determine realistic budget categories.
However, what you do not want to do is go into debt (or further into debt) because you are overspending your budget. Here are some tips for what to do when you go over budget for the month:
Stop the Spending
If it looks like you're going to go over budget in a category early in the month, get creative in figuring out ways that you can stop spending on that category. If it looks like you'll go over budget in your food category, then get creative and start eating food that you already have in your pantry/fridge/freezer.
Reduce Spending in Another Category
If you notice that you'll likely go over budget in one category early enough in the month, find another category (like Entertainment, Shopping, Groceries, etc.) where you can reduce your amount of spending and shift any extra money over the category where you went over budget.
If you use a cash envelope system, it's very easy, since you can physically shift the money from one envelope to the other. If you don't use the cash envelope system, it can get a bit trickier since you're shifting money around on paper.
Pull Money from Your Emergency Fund
If you did have a true emergency pop up, you can use money from your emergency fund to cover the expense. Just make sure that you replenish that money in your emergency fund, so you're ready for the next time. And make sure it's a real emergency (and no, a new pair of shoes is not an emergency 🙂 ).
Earn Extra Cash Quickly
If you live paycheck to paycheck, and you don't have any extra money, you'll need to quickly come up with some extra cash to pay your bills. You definitely don't want to put the extra expenses on your credit card and go into debt! Do you have anything at home that you can sell for some extra money? Could you help others with some odd jobs for extra cash?
Review Your Budget
However, if you find yourself going over budget month after month, you should schedule a Family Budget Meeting with your significant other to discuss ways that you can get your budget back on track. You'll need to figure out a realistic budget that you can stick to each and every month, even if it includes making some sacrifices in the "extras" like eating out and entertainment.
What about you? What do you do if you go over budget? Do you keep an eye on how you are doing vs. your budget during the month so you can make adjustments?
Leave a Reply