When I first started trying to get my financial life in order, I knew that one of the first things I had to do was start budgeting. I wanted to pay off my debt fast, and I knew that in order to do that, I had to set a budget, and stick to it. While I’d always had a loose form of a budget while I was in University, I only really started to budget with actual categories after I graduated. I had an idea of what I could afford to spend in different areas of my life, and I started the month sure that this budgeting thing was going to be a huge success.
My first budget was pretty much an epic fail. I went over budget in many, many different categories. I had misjudged my ability to control my spending and as a result, all of my impulse buys and lazy convenience purchases showed up as glaring red overages in my Mint.com account. I ended the month feeling terrible and dejected, something I wasn’t used to feeling.
But, instead of chucking the budget idea and writing the whole thing off as a bad experiment, I started the new month with new resolve, and made a few adjustments to improve my chances for success. Here is what to do when you go over budget:
Instead of ending up way over budget in some categories and under budget in others, I would adjust categories throughout the month, to make sure that I spent the same total amount in a month, but maybe more on groceries one month and less on gas, if need be. This way, if I had to go over budget for some reason on one category, I could just take funds from another category to even things out.
Know How to Stop Spending
Eventually, I became very good at putting the breaks on my spending halfway through the month. If I could see that I was going to go over budget on groceries if I continued at my current spending pace, I would put the breaks on, and force myself to use ingredients that I already had in my fridge/freezer/pantry, instead of buying more. The same goes for entertainment, personal spending, etc. If a budget overage is in my future, I have no problem declaring a spending ban for that category.
Using Credit is Never Ok
One thing that I really, really try not to do and hate myself for doing, is going over budget with credit. Using a credit card to finance your budget overages pretty much guarantees that you don’t have a way to pay off that balance.
This is never acceptable because carrying a small balance made up of budget overages is how major credit card debt gets started. What is only $100 one month becomes $200 the next month, and before you know it, you’re several thousand dollars in debt!
Having a budget – and sticking to it – is a great way to help you achieve your financial goals. Budgeting frees up extra cash for debt repayment, savings, or whatever else you want to spend it on. There are lots of easy ways to stay within budget, and going over budget isn’t the end of the world – unless you put it on credit!
How do you keep from going over budget? Is it the end of the world if you do, or no big deal?