I've Gone Over My Monthly Budget, What Do I Do?
When you’ve gone over your monthly budget, these budgeting tips can help you manage your money to get back on track and in the black.
March 11, 2022
Budgets only work when you stick to them. Unfortunately, every once in a while, something may blow your budget.
You may find yourself saddled with an emergency auto repair, or you haven’t been paying as close attention to spending. Whatever the reason, these budgeting tips can teach you how to get back on track with your budget.
Assess your situation
The first thing to do when you go over budget is to assess the damage. By how much did you overspend, and where did that money go? Of the 74% of Americans who keep a budget, 79% admit to overspending, amounting to an average of $7,400 extra spending annually.
Identify the source and consequences of not budgeting correctly. Some of the most common overspent categories include online shopping, groceries and forgotten subscription services.
Now that you know where your money disappeared, it’s time to consider the consequences. Does it mean that you’re in credit card debt and unable to pay off your bills on time? Does it mean your bank account has overdrawn, and you have penalties and fees?
Answering these questions will give you a full picture of what going over budget means and its cost.
Tap your emergency fund
If you have an emergency fund, there are situations in which it makes sense to tap it. After all, it’s there to help you out when you’re in a pinch. So if you find yourself unexpectedly needing to replace your transmission, or your roof springs a leak, or you need to cover a surprise medical bill, turn to your emergency fund to make up your budget deficit.
Be careful about using this fund to cover non-emergency expenses. If you do tap your emergency fund, replenish the amount you took out, working that savings into a future monthly budget.
Freeze your spending
When you go over budget, the last thing you want to do is make it worse. Take a look at your monthly expenses list and freeze your spending on all unnecessary purchases. In particular, avoid turning to your credit cards to continue spending. If you don’t have the cash to pay off your debt in full each month, your debt can quickly spiral out of control.
Even if you make minimum payments each month, you’ll owe increasing amounts of interest on the rest of your balance. To avoid the temptation to spend with your credit card and take on new debt, you may consider taking it out of your wallet while you get your budget back on track, even putting it somewhere hard to access.
Adjust you other budget categories
If you go over budget in one of your spending categories, you may be able to adjust your spending in other categories to make up for the deficit.
For example, if your grocery budget is $400 a month and you spend $450, you may be able to make up that extra $50 by cutting spending in another category, such as your entertainment budget. If you go over your budget by a lot, you’ll have to make some serious adjustments to your spending this month or next so you can pay off any acquired credit card debt or pay yourself back for any shortchanging you may have done for your savings.
Tell bill providers if you’re going to be late
If going over budget means that you don’t have any money left to pay necessary bills, don’t panic. It can be helpful to keep your bill providers in the loop.
Giving them a call to tell them you’ll be late making a payment can let them know you’re taking the matter seriously. If your account is in good standing, you may qualify for a grace period or waived late fees.
Even if your providers give you a pass, make a plan to pay off the bill quickly. While late payments can end up on your credit report and negatively impact your credit score, they typically don’t end up there for 30 days. So if possible, pay your bills within that time period. It doesn’t guarantee that the late payment goes unreported, but it gives you a better chance of avoiding that outcome.
Look for ways to bring in more income
Instead of cutting spending, you could look for ways to make more and bridge the deficit. Can you pick up an extra shift at work? Do you have a side hustle that you could devote a little bit of extra time to? Or maybe it’s time to ask for that raise you’ve been angling for.
If none of these are an option, consider selling things you don’t need. You may look at recent purchases to see if there’s anything you don’t need that you could return. If you need it in the future, you can always repurchase the item once your budget is back on track.
Tell your friends
While it may be uncomfortable at first, try letting your friends know that you’re over budget for the month and can’t spend as usual. They’ll understand when you opt-out of group activities and they may even suggest budget-friendly activities like game nights at home. With your friends onboard, you won’t be tempted to spend money you don’t have or that you need to get your budget back on track.
Rethink your budget
If your overspending is a one-time occurrence, you may be able to pull yourself back on track without any major adjustments to your budget. For instance, a one-time expense, like a new refrigerator, isn’t something you’ll have to work into your budget going forward.
However, if you notice that you’re going over regularly, you may need to rethink your plan. For example, if you look at your monthly expenses list and see that you’re consistently spending $50 a month more on your grocery budget, it may be time to plan to spend more each month, shaving $50 off a different category. Or, if you buy a plane ticket to visit family once a year, build that expense into your budget so you can save for it.
We all go over budget from time to time, and learning how to manage money requires time, patience and experience. Getting a handle on these budgeting tips can help you avoid overspending.
If you have credit card debt due to going over budget, consider Tally†. Tally can help you organize and pay off your credit card debt in one place.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.