• Nathan Lippincott

Now What? Part 2 of Implementing the Budget: Overspending

Updated: Jul 22, 2018

When you're just learning to budget, overspending can easily happen. Nathan Lippincott, budgeting expert, shares ways you can quickly and easily correct overspending to keep your budget on track.


Many times in the beginning stages of budget, people will overspend. This is because a budget is new and you are still learning to control your spending habits. Overspending can mess with the budget and cause you to feel like you failed - but don't let it discourage you! The first and foremost thing to remember in this circumstance is that you are doing better on a budget than off of it, even with the overspending.


Remember: you had been overspending for years prior to taking control of your money and just never recognized it. So, when this happens after budgeting, relax and take a step back to look at the situation as a whole.


Solutions to Overspending

If you overspend in a category, the first thing to do is to see if you have any funds in another category that can be moved to the deficit one. Moving money from one category to another is a fair method to adopt and it is the best option to use. I recommend taking the money from the “fun” or “entertainment” category – something that is not a necessity. Most of the time, it is not hard to figure out a way to reallocate funds and still fit within the overall budget for the month.


If there isn’t excess money in any categories to transfer, you may have to adopt more extreme measures. Here are a few examples or possibilities: selling household items; working extra hours; taking on a side job or project. The goal is to avoid starting the next month in the negative. It is important to start each month on a positive note, with sufficient funds to cover all outgoing expenditures.


If you have tried all of these things and cannot find the needed money, the next solution is to adjust the next month’s budget to take in account the overspent amount. For example, if you overspent by$50 in the “Dinner Out” category and you budgeted $200, then in the next month’s budget, allot only $150 to accommodate. This will correct the deficit and put you back on the right path in the future. Another method is to subtract the necessary amount by the entire month’s budget. For example, if you normally have $3,000 per month to budget and you overspent in the previous month by $200, then you should truly only budget and spend $2,800.


What is most important to remember is that the more you budget and work your budget, the easier it will be. Factor in ahead of time that during the first few months there will be overspending so that when it happens, you do not feel like a failure and quit. Continue to get back on your budget and work your plan and later, when things are working smoothly you will be thankful that you did.

About Me

I am a financial advisor and budgeting expert for STM Assett Management in Fairhope, Alabama. I enjoy helping people work their way towards financial freedom while establishing solid money management skills.

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STM Asset Management is an Alabama licensed Registered Investment Adviser and permitted to service clients in Alabama and other states as permitted by law.