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How To Avoid Busting Your Budget:
My husband and I recently paid off $293,000 in consumer debt. It is seriously the best feeling in the world to only have a house payment. Talk about a major stress relief.
The crazy thing is that we still have to budget.
You would think that with all those extra payments gone we would be swimming in money (that might be a slight exaggeration).
The truth is, we aren’t suddenly swimming in money. The extra money is just reallocated to meet different financial goals.
Being Responsible is hard, but so goes life.
However, I made a mistake, I maybe, kind of, sort of stopped budgeting for a month or two. I put everything on auto-pilot and stopped paying attention.
I got busy with work, we ended up with two extra kids in the house, it is summer, and in general, I just got lazy.
So last week I finally took some time to catch up on everything and wasn’t exactly happy with what I found.
I didn’t just break my budget, I completely blew it out of the water in a few areas.
I’m embarrassed to share these number – but here you go – as you can see, I obliterated my budget.
Obviously, the May and April numbers are more in line with my usual spending. I typically budget $600 for gas and $550 for food.
I know exactly where the money went, but seeing how much we actually spent was a real shock to the system.
Seriously how did I spend $1,400 on food in one month?
Related Post: Check out my post on 14 money-saving tips to lower your grocery bill for tips on how I usually manage
***Editors note: I just signed up The Grocery Budget Makeover. I’m the biggest dork, but I’m really excited to see if I can cut my regular grocery budget further.
If you go to the link, it says that the class is closed until September. However, if you sign up for the waiting list, they have an express class that is currently available. I did a bit of research and the express class is slightly cheaper but doesn’t include the accountability section and the Facebook group.
I’ve had a few friends take this class and they swear by it, so I decided to give it a try.***
What did I do wrong?
Part of budgeting is tracking your spending throughout the month – I skipped this step.
When I was in college, I carried around one of those Franklin Day Planners. It was a gift from my father-in-law who was a huge Steve Covey fan. I used it for keeping track of school and work, but one of the little extra’s were spending logs.
At the time, I wasn’t exactly rolling in the dough, so I started writing down all of my expenses. I tracked everything. This was before debit cards were widely used, so most of my transaction were in cash.
I had a few major categories (food, clothing, gas, entertainment) that every expense went into. At the end of each month, I would add the categories up and see where my money had gone.
As I got more sophisticated my planner was replaced by an Excel spreadsheet and eventually, I upgraded to my current software which is Quicken.
How you track your spending isn’t important, it is the tracking that is critical to budgeting.
If I had been paying attention I would have made different spending decisions, particularly at the grocery store. I’m just so mad at myself for losing track of my long terms goals for a little bit of short-term fun. I’ve thought a lot about my mistake and come up with six ways to prevent this mistake in the future.
Six Steps To Stay Within Budget
1. Check your bank accounts daily
This is something I typically do, but I got lazy and out of the habit. I chose not to make time for something that takes me less than 5 minutes each day.
I know it sounds small, but when you check your balances each day it is a subconscious personal accountability system. When you see your balance and do a quick check of your recent spending it reminds you of your budget.
Those daily reminders will keep you on track.
2. Use financial software to track your spending
There are hundreds of programs on the market. Do your research and find the program that matches your need and skill level.
Personally, I use Quicken Home and Business. I seriously love this program and the reporting structure. Just as a disclaimer, it is more complicated than some of the personal financial software on the market.
I’ve also used Mint and Everydollar. They are both simple and easy to use free programs.
3. Keep a watchful eye on your budget busting categories
Don’t just assume because you have a budget you are set. Keep an eye on your problem categories. You know the categories I’m talking about? Mine are gas, food and outdoor gear. Those categories get me every time if I’m not careful.
I can guarantee you know your spending weaknesses. Those weak areas need a little bit of extra TLC.
Sometimes all we need is a little direction on the difference between wants and needs. If the issue is more severe you may need to find ways to avoid emotional triggers that cause overspending.
4. If you can’t control your debit/credit card spending switch to cash
I used cash for years to control my spending. It is really hard to keep spending when you are out of cash.
I’ve switched to a credit card for ease of tracking but can guarantee that I wouldn’t have gone over my budget if I had been using cash.
Using cash takes a lot more planning and attention to detail. You can still choose to go over your budget, but with cash, it is a conscious decision rather than a lack of attention.
When I do cash based budgeting I’ve found that the envelope systems works best for me. There are a ton of options available that you can adjust to meet your individual needs.
5. Don’t put your spending on auto-pilot
I’ve been budgeting for years and still failed miserably when I stopped paying attention. If you want to be financially self-sufficient you need to make daily decisions that reinforce your goals.
That means you have to pay attention.
This means doing all the little items on this list and living intentionally each day.
6. Know your budget spending limits for each category
If you don’t know your limits you are going to overspend. It is that simple. If you are about out of money in a particular category then you need to say no.
It is okay to say no occasionally. Controlling your spending is significantly more important than having all the extras in life. If it is a must-have, then you will have to cut the budget in other areas.
We didn’t need to bring Ribeye steaks to all of the BBQ’s. We could have skipped a boating day at the lake or accepted gas money from friends.
Budgeting really is all about self-control and making intentional decisions that will keep you on track.
Why Staying Within Your Budget Matters:
If you are going to control your money and budget properly you need to, at a minimum, do a mid-month check up on your spending. Mid-month check-ups allow for minor course corrections that can mean the difference between going slightly over or completely obliterating your budget.
You aren’t budgeting if at the end of the month you are totaling up your categories and hoping for the best.
Real budgeting comes when you are making conscious spending decisions that are tied to realistic measurable goals throughout the month. I forgot the simplest rule in budgeting for dummies.
Learn from your negative budget months.
Hopefully, this post will help keep me more accountable. I don’t want to be a hypocrite who constantly tells people to stay within a budget and then gets too lazy to do it myself.
So now it is back to paying attention to my personal finances and actively budgeting rather than re-actively wishing I had done better.
For more information on Budgeting you may want to check out these posts:
- The Two Unbreakable Rules of Budgeting
- How To Budget If You Have An Irregular Income
- How To Set Up a Percentage-Based Budget
For Money Saving Ideas you may want to check out these posts:
- Want or Need: How to Control Your Spending
- Healthy Eating on a Budget
- How to Avoid Emotional Triggers that Lead to Overspending
Can I just say how happy I am to have found another mum who geeks out on personal finance! Looking forward to hunting around your blog a little!
Yeah! I’m so excited to meet you. I love personal finance and can’t wait to check out your blog too.
Great tips again Amy! I am going to head over and check out your grocery shopping post!
I’m glad you enjoyed the post and hoped you enjoyed the grocery one as well.
I’ve definitely had to use the tip about switching to cash. It’s so easy to spend spend spend when you can’t actually see the money leaving your hand! I agree with you completely that saving money is a very active process you need to check in with daily.
When I pay with cash I always pay more attention to my spending. It is just too easy to spend money when using a credit card or even a debit card. Saving money really is an active process.