Overspending happens. Sometimes, it’s unavoidable, like an emergency trip to the vet. Other times, it’s a single splurge on something special. And, more often than I’d like to admit, it’s just the build-up of several small, not-so-great decisions (I’m looking at you, Starbucks.).
… and, of course, from time to time, it’s a mixture of all of the above happening all at once. Ugh. That’s when you know it’s time to regroup, which isn’t exactly an inviting prospect. I mean, who wants to confirm that, yeah, it’s probably a good time to go on a PB&J diet for a month?
But, remember, your budget is your friend. Really. It’s not there to judge your past decisions or make you feel bad—it’s only objective is to help.
Your budget is there to show you the path from where you are to where you want to be. So, if you’ve slid off-track (a position that nobody wants to be in), then it’s a very good time to get nice and cozy with your budget. Here are three steps to get you started:
1 – Reconcile Your Accounts
This is probably the toughest step of them all, but it’s the one that sets you free. That’s right, it’s time to face reality. So, grab a cup of coffee and fire up your budget. It’s time to reconcile with your bank account(s). In other words, make sure that your budget and bank balance(s) match. (It’s times like these when you’ll thank yourself for simplifying accounts!)
If it’s been a while since you reconciled, this might be a good time for a fresh start.
2 – Cover Overspending
Next, cover your overspending. And, no shame! You’re not a failure because you didn’t perfectly stick to your budget, you’re human! Make some adjustments, and keep going!
3 – Be Honest About Your Needs
With Steps 1 and 2, complete, you’re back in a power position because you know exactly how many dollars you’re working with. Now, it’s time for a heart-to-budget talk. Ask yourself:
- Was my heavy spending mostly the ripple effect of a one-off circumstance? (e.g., You moved, had to pay for a moving truck, packing supplies, security deposit and several nights of take-out because your kitchen was in boxes.)
- Was my heavy spending just the accumulation of habits that don’t fit well in my budget? (e.g., You started a new job and it’s been difficult to pass up the daily invitation to eat out at lunch hour. Plus, you’ve been spending more on gas, too, because your new commute is twice as long.)
Pinpointing why you spent more money than usual helps you adjust your budget, going forward, to help you avoid future cash flow crunches.
Using the first example, above, you might pad your moving fund category more for next time, or even break it out under its own category group with categories for the actual move (truck, packing supplies), move-in costs (security deposit, utility deposit, pet fees) and incidentals (lunch on the road, eating dinners out for the first week).
Or, in the second example, you might realize that you’d rather pack your lunch and save some cash—especially now that you need to budget more money for gas to cover your new drive to work.
The point is, cutting back isn’t always the right solution. It might be the solution, but it’s also OK to increase your budget for the categories where you overspent. Sometimes you have to spend more, sometimes it’s a quality of life issue, and both are totally OK! You’re the boss of your money. This exercise is a chance to shift your budget around and reprioritize your dollars, accordingly.
Don’t Feel Down, Take Action!
It’s never fun to be at the tail-end of a period of heavy spending. Money feels tight, paychecks feel slow and you’re probably dreading the lean days ahead while you catch up. But, if you follow these three steps, you’ll funnel all of that frustration and overwhelm into an action plan that puts you back in control. And, if you’re anything like me, you’ll feel a sense of empowerment the moment you start.
For more help, drop into our free, online class, Roll with Your Overspending. It’s just 20 minutes long, and our friendly teachers always save some time to take your questions!
Your Next Step
Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?