Going over your budget is going to happen so you want to be prepared. We all do it. Maybe you forgot someone’s birthday. Or maybe you forgot to add that wedding shower to your calendar. Or there is always that pet emergency vet visit. Since none of us has a crystal ball to tell the future it is safe to assume that you won’t get it 100% right, 100% of the time.
Add Sinking Funds
Whatever the case may be, it is not the end of the world, but if you want to be successful on your financial road, you should always review why this happened. Was it just a one time thing that probably won’t happen again? Or was it something that you just forgot about?
Insert sinking funds. PS: I have an entire blog post just on sinking funds so click here to read that.
I want you to look back at the past 6-12 months and see what “unexpected” expenses have come up that you weren’t prepared for. Most unexpected expenses aren’t truly unexpected, we just weren’t prepared for them. So let’s prepare now!
Some sinking fund ideas: repairs (car and house), pets, kids, gifts, holidays, travel, and annual fees/registration.
Adjust Your Budget Categories
Making a budget one time is not enough. Your budget will never be perfect and you need to make adjustments each month. Of course, your fixed expenses will probably stay the same (or close to it) but what you are prioritizing that month will change. If you are consistently over budget then you either 1) do not have a realistic budget or 2) have a realistic idea of what living within your means is.
I know prices are CRAZY right now and food/gas have increased drastically, so if you haven’t redone your budget recently here is your sign to do it. You might not be overspending, the budgeted amount just might not be realistic.
Your budget should be flexible. Things come up and you need to be able to adjust it accordingly. Some months, like those around holidays or birthdays, may be higher-spend months compared to others.
If you haven’t completed a money audit recently, this is the perfect time to do it. Choose an average month and track all your expenses to see what you actually spend.
There is an entire module in Flourish FinanciALLI about how to successfully complete a money audit before you even create your budget.
Budgeting Per Paycheck
You may also need to evaluate HOW you budget. If you budget for the month but you receive 2-4 paychecks, you should try budgeting per paycheck. This is the method I teach my students and it is wildly successful. It is also what I personally do. You may be overspending simply because all your bills are due the first half of the month and you don’t have enough money for your variable expenses.
Budgeting per paycheck allows you to see how much you can spend each paycheck. We’ve all been there where you get paid and after a week you’re struggling to make it to the next paycheck. With this method, you’re allocating your entire paycheck so you can see what you can actually spend until you get paid again. A monthly budget doesn’t do this (not without extra steps).
Make a List
Maybe you are not in a position in this season of life to attend every birthday, wedding, holiday celebration, AND THAT’S OKAY.
Do you need to sacrifice to meet your goals? Not if what you want to do is within your means, but if it is not you may need to go back to basics – budget your four walls (home, transportation, food, utilities) and spread out from there.
I have a list of wants on my phone. Remember, it is not “no forever” it is just “no for now”. The wants list reminds me that I can get what I want one day, it just isn’t today. Also, some things I have on that list I don’t even want anymore after a few weeks .
Everyone goes over budget. Everyone. Whoever tells you they’ve never gone over budget is lying. So don’t be too hard on yourself. Figure out what happened, create a plan, make adjustments, and keep going.