Everyone messes up their budget. It’s just a fact. I’ve been budgeting for years and there are still months where I go over in one category or completely forget about something that had to be done during the month. Making mistakes is part of the financial independence and budget journey because we’re only human.
There are 3 simple steps you can take to get back on track if you go over budget.
1. Figure out what went wrong
The first and most important step to getting back on track if you go over budget is figuring out what exactly went wrong. How did you make this mistake? Did you impulsively spend money? Did you emotionally spend money? Were you too restrictive in a particular budgeting category? There are tons of reasons that budgeting can go awry, but identifying the main cause will give you a solid guideline to reduce the chances of this mistake in the future.
What I don’t want you to do is lose sleep over this mistake. You have to identify your misstep, learn from it and move on.
You may have to increase or reduce a line item in the future.
You may have to shift the way you budget if what you’re doing now isn’t working for you.
You may discover you have an impulse spending problem and you need to address it
Remember that no one’s budget is perfect. Give yourself grace, figure out where you went wrong and then create a plan to do better next month. If you need help creating a plan, check out my signature program Flourish FinanciALLI.
2. Reconcile your budget
After you figure out where you went wrong, the next step is to go over your budget and make sure that your numbers are accurate. At this stage, we’re not in “fix it” mode — we’re simply in “data collecting” mode.
This step is to figure out exactly where you are right now and how much money you need to “make up” in other categories.
You can reconcile your budget by going line by line. Go through your bank transactions or credit card transactions for the month with a good ‘ol highlight, pen and paper.
For example: Did you think you spent $300 on groceries, but in reality you spent around $500? If you haven’t done so already, track a month of expenses to get your actual numbers — not just your ideal budget numbers.
3. Move things around
Now that you know exactly where your numbers are, don’t go and hide! This is finally the step where we take action!
The best, and I mean, the best thing about a budget is that it is a living document. What exactly does that mean? It means that when you sit down at the end of the month to create the budget for the next month, it doesn’t mean that what you write is set in stone.
Budgets are created to evolve and move with you and your life — not to hold you back. So, if you go over budget, the best thing you can do to get back on budget is to move money around in different categories. Now, I don’t want you to rely on this but you have this as a backup plan.
For example: If you overspent in your grocery budget by $200 and you have a “Personal Care” budget that has $200 in it, move that $200 to the grocery fund so that you are no long “over budget” in that area. If you don’t have anything to move and you’re still paying off debt, reduce your extra debt payments to cover an expense. It is far better to pay less to debt instead of adding to your debt for the month.
Budgeting isn’t easy and mistakes will be made (no one is perfect…seriously). The experts still make mistakes, so don’t feel guilty or ashamed for messing up here and there. With these 3 steps to get back on track if you go over budget, you’ll never have to feel overwhelmed or lost again!
If you need help getting back on track make sure to reach out!