In budgeting, all it takes is one ill-timed expense to send the best-laid plans into a tizzy.
Maybe you blew your budget for reasons out of your control: a sick pet, a car breakdown or a dreaded dental emergency.
Or maybe your shortfall happened because you made a mistake: You overindulged on your vacation, or you didn’t plan for an irregular expense that’s very much expected. Hey, it happens to the best of us.
5 Moves to Make After You’ve Blown Your Budget
When you blow your calorie count by splurging on dessert, it’s tempting to say you’ve blown it for the day/week/month — even though the obvious solution is to cut back the next couple of days and schedule extra gym time.
With budgeting, it’s the same. When you’ve spent too much, the worst thing you can do is give up and start plopping down the credit card just because you’re over budget. You can bounce back with a little self-reflection and discipline.
Follow these five tips for how to get back on track with a budget.
1. Identify the Problem
If your budget shortfall was the result of a one-time emergency expense, this one is so obvious. But if you blew your budget because you simply spent too much, or if blowing your budget is a regular occurrence, it’s time to take a hard look at your spending.
Did you overspend on a one-time event, like back-to-school shopping or a birthday gift? Were impulse purchases a factor? Or maybe your budget has slowly been creeping up month after month, and you’ve just now realized you’re spending too much.
We’ll discuss how to combat these budget-busting habits later. Your first step is to diagnose the problem.
2. Pay Off Your Bills Now, if You Can
If you charged the expenses you didn’t budget for to a credit card and you can afford to pay it off now, do it. If that means you don’t add money to your savings account this month, that’s OK. Your goal is to get back on track.
If the expense was for a true emergency — meaning it was unexpected, urgent and necessary — and you have money set aside in a rainy day fund, you have our permission to tap into it if you need to.
Of course, if you can make extra money on the side, pick up extra shifts or sell stuff online to cover your shortfall without touching your savings, that’s even better.
3. Adjust Your Budget if You Incurred Debt
If you weren’t able to pay down your extra expenses immediately and have a lingering credit card balance as a result, you need a plan to pay it off as soon as possible. If you don’t have a monthly budget, it’s time to change that.
One of our favorite budgeting methods is zero-based budgeting, which makes you give every cent of income a job — whether it’s for needs, wants, saving, investing or paying off debt.
Look at your past three months’ worth of bills to determine your normal spending habits and figure out where you can cut back to put as much toward paying off your credit card debt as you can.
4. Look at Past Spending to Find Overspending Patterns
Let’s face it: A lot of times you blow your budget because you’ve developed bad habits. Looking back at your past spending can help you identify patterns. Here’s what to look for and how to curb your budget-busting behavior.
Look through your recent transactions for purchases you didn’t plan to make: the Uber Eats meals you ordered at the end of a long day, the shoes you had to have because they were 20% off, the trip to Target for paper towels that somehow turned into a $200 shopping spree.
If you find a lot of these, you’re probably prone to impulse buying, especially when you’re feeling anxious or down.
The key is to make it harder for yourself to spend money on a whim. Delete shopping and food delivery apps. Unsubscribe from emails from your favorite store. If you want to spend money on something that isn’t a need, try a cooling off period of at least a week. If you still want the item after that and it won’t break your budget, then you’re allowed to buy it.
Of course you know to budget for your rent or mortgage, car payment and groceries. But a lot of expenses occur regularly — but not monthly — and they’re easy to forget about when you’re budgeting. Your cat’s annual vet checkup, your driver’s license and tag renewal, and the hair cut you get every two or three months, to name a few.
Here’s a complete list of 101 budgeting categories you can use to make sure you’re not leaving anything out.
Another common mistake: failing to account for variable expenses, i.e., the ones that fluctuate. If you live in a warm area, you probably need to budget extra for the summer months when your A/C is cranking.
If your spending is slowly creeping up month after month, or if you see that your spending for each given month is significantly higher than it was for the same month last year, you may be succumbing to lifestyle inflation, which happens when you increase your spending as your income goes up.
Some lifestyle inflation is inevitable, but it’s important not to put every cent of each pay raise or bonus toward upgrades like a fancier apartment or more dining out. You’ll only get ahead and prevent future budgeting mishaps if you divert some of that cash to savings.
5. Give Yourself Room to Make Mistakes
If you want to never go over budget, you need to predict the future, have perfect luck and morph into a budgeting robot that never makes a mistake. Since that’s not happening, you need a safety cushion so that an unexpected expense or a little overspending doesn’t cause a crisis.
The first goal to work toward is building an emergency fund with three to six months’ worth of living expenses that you can dip into as a last resort. No, it’s not easy — if you’re not swimming in disposable cash, this is a long-term goal. Just remember if you get frustrated that even saving a few hundred dollars could stave off a crisis.
For major expenses that you can plan for, you may want to start a sinking fund, which you contribute to over time to spread out the cost.
5 Things Not to Do After Overspending
The most important thing to remember when you blow your budget is that it’s a temporary setback. Your bank account will recover. But if you do any of the following, you risk making a short-lived problem into a long-term one.
1. Take Out a Payday Loan
The annual interest rates for payday loans are often upward of 300%, and about 70% of borrowers need a second loan within a month. That means you’re likely to keep blowing your budget as you struggle to pay back the loan.
2. Get a Cash Advance
The interest rate for the average credit card cash advance is about 6 percentage points higher than credit card interest rates, plus they usually have fees of about 5%. You’ll almost always pay less by charging a purchase to your credit card.
3. Borrow From Your 401(k)
Not only will you miss out on potential gains and compound growth, but you’ll have to pay back the balance in full if you leave your job for any reason. If you can’t afford to repay it, the IRS treats it as an early withdrawal, which means you’re on the hook for ordinary income taxes plus a 10% penalty.
4. Only Make Minimum Credit Card Payments
Banks love it when you only make minimum payments — which are typically just 1% to 3% of your balance — because you pay lots of interest and stay in debt for a long time. Even if you can only afford to contribute an extra $20 a month, do it: You’ll recover from your budgeting setback much sooner.
5. Ignore the Problem Altogether
If your budget is so stretched that you can’t afford even the minimum payments, you still have options. You can often work out a payment plan for medical bills and negotiate with creditors. It’s best to seek options as soon as you realize you’re in the hole to avoid the hit to your credit.
A Final Word About How to Get Back on Track With Your Budget
Budgeting shortfalls happen from time to time. So give yourself a break.
But when — yes, when — you’ve recovered from it, don’t forget it. Remember this moment whenever you need help saying “no” to an unnecessary expense or need motivation to stash extra money in savings instead of splurging.
Robin Hartill is a senior editor at Codetic. She writes the “Dear Penny” personal finance advice column, which is syndicated in the Tampa Bay Times Sunday business section.