What to Do When You Overspend Your Budget (Without the Guilt)
I went to Costco today, and I had $150 budgeted for my trip. I spent $279.
That is more than $150. Like, significantly more. So what am I going to do about that?!
First Things First: This Isn’t a Failure
Before we dive into the solution, let me say this: this necessarily isn’t a failure. Things happen. A budget is a guideline. It’s an idea, and for it to work needs to be realistic.
We’ll talk about whether my budget was realistic in a bit. But first, let me walk you through exactly what I do when something like this happens.
My Four-Step Plan for Budget Overages
Let’s pretend that you are not able to increase your income immediately. You have a set dollar amount coming in. You accidentally overspend or you have an unexpected cost, either way, what are you going to do about that?
In my budget, it shows that I’m in the red because I just overspent by $120. I need to get that negative number back to a positive. There are several steps that I take and areas that I look at when something like this happens.
Step 1: Check the Future Spending Account (Also known as Sinking Funds)
The first thing that I do when I overspend in a category is look at our future spending account. Some people call this sinking funds. I call it either overflow or future spending.
It is a single savings account that we put money into for future spending or for situations like this. We use that money for birthdays, anniversaries, quarterly expenses like our HOA or our pest control. We use a savings account that is tied to our main checking account so money can be moved easily back and forth.
The account is also because things like this just happen. Things pop up that you cannot predict. You can try and plan for everything, but you just never know what will happen and when. We do not want a situation where we have to dip into our emergency fund or use credit.
I look at this account as my safety blanket. I know that I have some breathing room and do not have to be perfect to the penny. This account does not affect any of our other savings goals.
Step 2: Look at Our Goals
Next, I look at other goals, like are we putting more into our 401k or our Roth IRA because it’s the end of the year? Are we paying extra payments towards a debt so that we can pay that off faster? Do we have a spending category that I can skip this month?
Step 3: Review Our Bills
Another category that I look at is our monthly bills. Is there a bill that is not due yet, but I have scheduled to pay it? If that is the case, I can move that bill to another pay period and use that money.
Step 4: Adjust the Grocery Budget
Finally, the last category that I look at is our grocery budget. If I can, I will reduce that amount.
How I Spread the Impact
I went over by $120, that’s a pretty good chunk of money. So, say I have like $300 in my future spending, I might not want to cut that amount in half.
Maybe I’ll take $75 from future spending and $25 from the grocery budget. Then $25 from a bill that I can scoot to a different pay period while keeping it within the due date.
That way I’m pulling a little bit from each account, and I’m not totally gutting any one category.
I can easily reduce our grocery budget because we have an additional second pantry in our garage that holds at least two or three items of everything that we need. And we also have a deep freezer full of pre-made meals that we can access. Rarely am I buying groceries that we immediately need to use. Side note: This is just my preference to have a few of everything. It gives me peace of mind and makes a week like this even easier to achieve.
What Could I Have Done Differently?
What could I have done to avoid this issue?
I Could Have Added Up My Cart
Number one, I did have a little thought when I was getting towards the end of my shopping, where I said, “Huh, should I add everything up in my cart and see how much that’s going to be?”
I was at the end of my shopping trip. It is about a 20-minute drive to get to Costco. It is always like Black Friday busy there. It’s just always packed. Therefore, it’s not something that I love to do, and it wipes my energy out when I go.
When I looked at everything in the cart, I thought to myself, “Yeah, I want all of this.” I bought something that was on sale. That alone was going to save me $12. I didn’t want to have to worry about sale dates and getting back to the store within that time frame.
I caught myself feeling lazy, but I was also protecting my energy because I do have a chronic illness. With a chronic illness, you do have to think about these things. What is the risk versus reward? Do I want to make an entirely different trip out here, or do I want to sit at home and manipulate my budget to work for the money that I spent?
The Real Issue: Was My Budget Realistic?
The other thing that I could have done or that I will do is I’m going to adjust my budget.
I picked $150 out of thin air. I was like, “that sounds like a reasonable amount”. I use an Excel spreadsheet for budgeting. And when I was manipulating the numbers to see how everything was going to work out from here until the end of the year, $150 looked like a great number to spend at Costco.
Was that realistic?
Your budget needs to be realistic in order for it to work.
I went and bought three cases of protein shakes at $33 a piece. Is $150 a realistic budget when I also had to buy three different over-the-counter medicines, and I also found two sweaters that I liked?
No, it was not a realistic amount.
I’m going to be looking at bumping up my budget to around $250 – $300 for next month. That amount should set me up for success for a more realistic shopping experience.
If you’re going for five items that are going to cost you $250, but yet you put $150 in your budget sheet to make it work. That’s not a realistic budget. Then you’re going to beat yourself up because you overspent. Well, did you overspend, or did you not fill out your budget properly?
A Note on My Budgeting Categories
My groceries, household items, clothing and beauty is rolled up together. Groceries, covers our regular grocery haul from Aldi and WalMart. Then I have a budget for Costco and Target. All the things that you could buy at those stores is what goes under that budget.
So Costco? Everything I buy there goes under the Costco line item. I’m not breaking out paper towels from over-the-counter medicines or clothing. It all goes under the same category. For us, it’s all coming out of the same place anyway, so why break it up. That is too much tracking for me.
Let’s Recap: What to Do When You Overspend
Again, here are the steps that I take when I quote-unquote overspend in a category:
- Look at our future spending – which is kind of like our savings account. It’s not our emergency fund. It’s just a savings account for money to flow in and out when things like this happen.
- Look at our goals – Can we adjust any goals?
- Look at our bills – Is there a bill that I’m paying early that I could move to a different pay period?
- Look at our grocery budget – It’s a really easy place to reduce since we have stockpiles and pre-made meals available.
The Bottom Line
Remember, things happen. Life happens. Your budget is a tool, not a punishment. The goal is to make adjustments without stress and without beating yourself up.
And sometimes? Sometimes the “overspending” is really just a sign that your budget wasn’t realistic to begin with. That’s okay. You adjust and move forward.
I would love to hear what you do when something like this happens. Leave a comment and let me know!
