Last week our family planned a fun day out. We’ve shared before that we make sure to budget “mad money” or “fun money” in our budget, even while we’re on a debt-free journey to pay off over $90,000 worth of debt.
We give ourselves PERMISSION to spend money and have fun, and not constantly live in scarcity mindset telling ourselves NO to everything. When you allow yourself room for fun, it’s amazing how more able you are to be disciplined where it counts.
Right now we budget $20 per pay period for “mad money”. This generally covers a treat out, movies to the cheap theater, or a splurge at the grocery store. It’s not a lot, but it is fun.
But when we went out to eat at McDonald’s we overspent our “mad money” budget by $12. (Whoops)
And we couldn’t even take it from the grocery budget because (whoops) we overspent on that budget too.
Our situation got me thinking about how we handle overspending in our budget, and it got me thinking that there may be some of you who struggle in this area too.
Here’s a video of me walking you through what we do! Hope it helps. I’ll include a summary below as well.
5 Tips to Get Back On Track After Overspending Your Budget
1. Tweak Your Budget
We all have some amount of flexible spending. The cool thing about a budget is it is FLEXIBLE. If you overspend in one area of your budget (or in our case, two) we just have to take money from another ‘flexible’ budget area to make up for it. In our case, we took money out of our date-night budget and our transportation budget because we had a full tank of gas in the van and pay day was only a few days away.
A Word of Caution
There are times where there just isn’t enough in the bank account to cover your expenses. You literally don’t have any other budget areas to take money from or tweak. If this is your case, it’s time to really sit down and look at your spending. What are you spending your money on? Is it to feed your family and keep a roof over your head? Or is it eating out and buying new fashion items from amazon? If you don’t have enough paycheck to cover your spending, cut all your wants in your spending until you can raise your income or get a handle on your bills.
2. Have a Cushion in Your Bank Account for Unexpected Expenses and Overspending
Have you heard of zero-based budgeting? It’s the concept of assigning every single dollar you make into a category so you don’t lose track of your money and spend it unnecessarily. It’s an awesome concept that we use in our family.
However, we still “assign” a cushion every month in our budget that we don’t touch. It’s there as a shock absorber for things that don’t quite match up in our budget. Right now, since we are hyper-focused on finances, we have a smaller cushion of $100 that just hangs out in our bank account. When I balance our budget, I factor in that $100 like it’s any other budgeted item or bill. If, at the end of the month, that $100 still stays there we generally put the leftovers away towards a sinking fund, savings, or a debt-payment.
3. If You Find Yourself Constantly Overspending, Put Away the Credit or Debit Card and Use Cash Only.
Have you ever tried a cash-only challenge? We did it for about six months, and then do it every so often when we are REALLY struggling with spending. The whole point of using cash is you absolutely, 100% know when you are “out of cash” because there is literally nothing left. If you want to go out to eat, but you only have $2 to your name, you probably won’t be splurging for a Cafe Rio pork salad, but will enjoy the dollar menu at McDonald’s instead.
If you haven’t tried it out yet – test it out for a month. If you see success, keep with it until you feel you have a handle on your spending.
4. Make Adjustments
Sometimes, no matter how we try to scrimp and save on certain areas in our budget, we still consistently going over-budget. When this happens for us, we take time to review and make adjustments. In October our family made a goal to slash EVERYTHING in our budget as low as we could possibly go so we could throw everything we could at debt. James didn’t get rehired as an online professor for his side-hustle this semester, and we still don’t know if that’s going to be an option for the foreseable future. SOOOOOooooo, we had about $10,000 in our side-hustle income that we were losing. In order to still make our debt-free 2020 goal, we needed to really make some sacrifices in our budget and spending.
It went great for the first few months, but come winter we noticed we were overspending consistently in regards to our health budget (doctors visits, appointments, pills, supplements), groceries, and our eating out budget. When we slashed everything, we didn’t budget anything for eating out. However, after almost two months in winter and definitely eating out during that time, we have found ourselves having to put in some sort of budget for eating out for my sanity. I’m too tired to cook all of the time, and I need to get out of the house a lot more than I have been. So while it is not part of the original plan, it is part of our new plan. We also only budget $15 for clothing because we just bulked up clothing at the beginning of the year with hopes it would last them until we paid off our debt, but already we have kids needing new shoes, outgrowing clothes, and just normal everyday life. Only setting $15 aside isn’t turning out to be realistic for our family, so we adjust.
Are there areas of your budget where you are overspending? If you’ve tried to cut back as much as you can and you still are struggling to hit that budget you’ve established, re-evaluate and make adjustments to fit a more realistic picture of your life.
5. Always OVERBUDGET for bigger expenses, especially vacations, Christmas, or Any Other Area You Have a Habit Of Overspending
There are certain areas that we ALWAYS overspend. These are areas where all self-discipline seems to go out the window, or we just don’t quite calculate things up correctly.
For example, this year on our super-restrictive birthday budget we are planning on spending $20 for a simple, fun gift for the kids on their birthday. Do you know how much we actually BUDGET for? $80. Yep! $80. I am routinely terrible at keeping to a budget in regards to birthdays, and instead of trying to ‘find’ that money down the road, I’m just budgeting that money in now as a ‘cushion’ because of past experiences.
Vacations can also be a tricky area to budget because what is quoted to you online or over the phone isn’t always the final price you end up with. There always seem to be hidden fees, more expensive food, or something you completely forget to factor in such as tipping, storage, parking, fluctuating gas prices, or whatever the case may be. We always add an extra cushion in our sinking fund for vacations for this reason.
I’m still advocating sticking to your budget by all means and doing your research ahead of time to have a good estimate of upcoming expenses. But sometimes, we just need to factor in extra “cushion money” for things that we just aren’t disciplined with.
I hope this video (and blog post) helps you feel confident in your ability to tackle overspending.
