Have you ever felt like your budget isn’t working? That no matter what you do, you keep going over budget?
When you first start, it’s common to have a bad few months where you go over budget. You may have had an emergency, underestimated your needs, or forgot to include some monthly expenses altogether!
Nevertheless, it’s essential to realize that budgeting is a money skill. You probably will struggle with it at first. Then, as you stick with it, you’ll begin to understand what works. In doing so, you’ll stay on budget which allows you to achieve your goals on time!
One of the first steps in having a financial transformation is building a budget. With it, you have a plan for how you’re going to spend and save money so that your financial position changes for the better. But, as I’m sure you know by now, life rarely goes according to plan!
When you go over budget, you’ve spent more than you allotted. Regardless of whether it happened in one budget category or several, it lowers the amount you have left to spend. Now, to pay your bills and make ends meet, you’ll likely have to steal from another category, like your wants or fun money, which often leaves you feeling deprived!
While it may not seem like a big deal at first, going over budget means you have an elevated burn rate. You could be at a point where you’re living beyond your means, taking on debt, and heading towards a personal financial crisis. Not only that, but a spending increase causes your savings ratio to fall which impacts your ability to become financially free!
Even though you may be going over budget today, it’s possible to stop and get back on track. As long as you start using the tips below, you can get back on or even come in under budget. Not only will you have savings to pay off debt, but you’ll have it to build the life of your dreams!
Here are 5 simple ways you can stop going over budget and save more money!
One common reason that people tend to go over budget is that they don’t review their spending often. Even if they plan the perfect budget, they won’t know the amounts they’re actually spending. In addition to that, they won’t know whether they’re saving large amounts of money or busting their budget completely!
By tracking and reviewing your spending, you’ll have greater financial awareness. You’ll understand how much you’re spending in each category as well as the amounts you have left. This way, you can curb spending while there’s still time!
Another benefit to reviewing your spending is having the opportunity to reflect on your past purchases. As you do, you can determine which ones bring you joy in addition to the ones that feel like you’re wasting money. If you reduce and eliminate the ones that are wasteful, then you can save money without feeling deprived!
One easy way to track your spending is by using Personal Capital. Once you’ve signed up and connected your accounts, review your spending every few days. This way, your spending habits won’t be in the dark, instead, they’ll get brought to light!
For many people, credit cards make it far too easy to spend money they don’t have in their budget. Not only that, but credits make it difficult to be fiscally responsible. They encourage you to splurge now and figure out how to pay the bill later!
Oftentimes, people don’t have enough money to pay their credit card bills in full. Instead, they carry a balance that accrues interest. As the debt compounds greater, they’ll become handcuffed to a job for years to come!
Just like monitoring your spending can help you be more frugal with money, so can a cash budget. By giving up credit cards and other short-term loans, you’re left with a finite amount of money to spend. Once it runs out, you won’t have a way to get easy extra money. Instead, your only option is to stop spending, ensuring that you don’t go over budget!
More often than not, people who go over budget tend to focus on the here and now. Their primary concern is living in the moment and satisfying today’s wants. However, living only for today is also putting their financial futures at risk!
Whether you realize it or not, your daily actions determine the course your life takes. If you choose to live in the moment, then you’ll spend money you don’t have and wind up in debt. But, if you can shift your focus to what lies ahead, then you’ll also start taking control of your future!
One way to become more future-focused is by setting SMART financial goals. With them, you’ll have something to work towards that improves your financial situation. Not only that, but they’ll provide clear details on what you’re working towards as well as a timeframe for achieving it!
A few examples of short-term goals include:
With short-term goals, your money has a purpose. Rather than spending it at will, it’s reigned in and used to better your situation. In addition to that, achieving a short-term goal may be the psychological boost that you need for realizing that your long-term dreams are possible, too!
Many times, people don’t understand how or why they keep going over budget. For one reason or another, they just do!
However, it’s important to realize that everyone has emotional spending triggers. Whether you know it or not, you may spend more than you plan to overcome feelings of fear, guilt, or even jealousy. At times, your emotions can convince you to buy things you don’t need or want at prices you can’t afford, just so you can feel better, too!
For example, some money personalities use retail therapy to feel better. They may splurge on status symbols or try to keep up with the Joneses to improve their mood or perception of the situation they’re in.
Even if material possessions aren’t important to you, there’s probably another spending category that is. It may be dining out, travel, or sports. Regardless, spending too much on pleasurable things can cause you to keep going over budget!
While feeling good and enjoying yourself does help you build wealth, there comes a point when it’s financially unhealthy. For example, if you’re going into debt, stealing from your emergency fund, or looting your savings to feel this way!
However, once you recognize the feelings and situations that trigger you to spend, you become more likely to pause. This gives you time to take a step back and consider if you’re going to spend money wisely or waste it altogether!
If you’re like most Americans, house and transportation are two of your top expenses. In some cases, people dedicate over 50% of their gross income to these two categories alone. Since they’re such large expenses, going over budget on them can have serious repercussions!
For example, imagine you’re shopping for a home and have a $300k budget. But you end up finding the perfect one for $350k. While the down payment only goes up slightly, your monthly payment increases dramatically. Not to mention, you may have to deflate your lifestyle to afford it, too!
Too often, people only consider the monthly payments of a larger purchase. They don’t account for the ongoing maintenance, repairs, and other hidden costs that are associated with it. When these get factored in, they may not just go over budget, they’ll likely be unable to save at all!
When it comes to buying a big ticket item, it’s important to take your time. This allows you to weigh your options, think them through, and see how they fit into your budget. On top of that, you can determine whether you can afford the item or are willing to change your lifestyle so that you can!
Going over budget can be frustrating and discouraging. It may even be at the point where you’re losing hope and thinking about giving up altogether.
But, it’s important to remember that budgeting is a skill. At first, you’re going to go over budget and spend more than you plan. But over time, you’ll get better and it will become easier to save large amounts of money!
Which expenses keep causing you to go over budget? Comment below.
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