Your budget is made and everything is going well…until you find that perfect pink sweater for a heck of a deal on the clearance rack. And then before you know it, you’ve spent money you weren’t planning on spending.
So what do you do?
When it comes to budgeting and managing your money well, the key is to well, manage it. Think about this way – if you were a manager and it was your job to make sure the project you’re in charge of meets it target deadline, how would you handle something not going to plan?
You’d probably troubleshoot and more importantly, you’d want to identify the problem as soon as possible. There’s nothing worse than thinking everything is all honkey dory, only to find out that something went wrong in the beginning but you didn’t know anything about it until a week before the project is due.
If you’ve ever had a situation like this happen to you, you know how frustrating it is. And guess what, when you decide to spend money that wasn’t budgeted and then decide to not re-do or adjust the budget, you’re doing the above. You’re waiting until the last possible moment to deal with the problem but in turn you’re creating a mad dash of chaos trying to solve the problem.
Spending money outside of your budget happens. Seriously, it happens! It happens in our house and it happens in your house and it’s nothing to be ashamed of. The problems happen when you don’t adjust or re-do the budget.
You need to be an active participate in managing your money. So if you spend outside of your budget, you need to immediately adjust your budget – meaning you must take that money that you just spent from another category in your budget.
This is actually where a lot of folks royally mess up. They fail to adjust their budget and a lot of times they fail to do this not because it’s complicated or because they don’t want to have to give up spending money on dinning out, entertainment, or something else they feel is important to them.
Related Post: The 50/20/30 Budget Framework Explained
The important stuff
The thing is this – if you plan your budget around the things that are most important to your family, it makes deciding if spending the money outside of your budget is worth it or not. Sometimes it is but a lot of times, it’s not important.
So, the key here is that when you create your budget, make the importnat things important – highlight, circle them, star them whatever you need to do in order to signal that those are important to you and you don’t want to have to give them up.
Then when you’re out and about and you want to spend money on an incredible deal, look at your budget and those important things and ask yourself if you’re willing to give them up this month in order to buy XYZ. There’s no right or wrong answer here – you’re the one that gets to decide if it’s important or not. You just have to make the decision.
Some other things that need to be in place
Okay so if you’re budgeting regularly, give yourself a pat on the back because you’re freaking awesome!! But if you don’t have an emergency fund set up, we’ve got some work to do.
You need to have an emergency fund – at least a starter emergency fund – set up and you need a line item in your budget where you regularly contribute to this account. It doesn’t matter if it’s $5 a week, it needs to be a line item in your budget and it needs to be marked as important.
For us, the key to our emergency fund is to set it up at a bank that is different than your regular bank. We prefer an online bank because it is actually a little harder to get your money (it usually takes about 2 or 3 business days) which means that it has to be a true emergency before we pull the money out. Meaning we can’t just pull it out because we went over budget.
Help for Spenders
If you’re a Spender and you find yourself often going over your budget to snag up deals, you need to create a spending account. This will be a checking account that you regularly contribute money from your main (i.e. budgeted account) checking account. Then however much money is in that account is how much you have to spend – period.
So it can be money that’s used for those awesome deals you find or lunch with friends. It’s up to you, but when the money’s gone, it’s gone. You have no more left to spend or you’ll start wrecking your household budget.
Okay, so I know that this stuff can be a little overwhelming, so make sure that you take time to process the above and think about what you can do today to start helping your family stay on budget. Again, this is going to be something that works for your family and it may take a little bit of trial and error before you get it figured out but you will get it figured out.
So you tell me, if you’re a Spender, what’s one of the ways that you’ve successfully managed to stick to your budget?
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