One of the easiest ways to derail a household budget is to overspend. Everything looks great on paper, as you allocate your income to various categories, and your monthly spending allowance is set. However, the money runs out before the month does, and you find yourself wondering why the budget didn’t work.
Overspending, the culprit, may be attributed to a number of causes. In order to make your spending plan work, you must pinpoint the reason for your over-expenditures. When every penny counts, you can’t afford to run out of money before you run out of month!
One of the main reasons for overspending is circumstance. The refrigerator quits working. The car breaks down. One of the kids gets sick, and you are saddled with unforeseen medical costs. Being faced with an unplanned expense and unforeseen situations will often lead to overspending.
If possible, avoid the overwhelming impact of these costs by anticipating, and budgeting, for emergency expenses. Use $1,000 as a benchmark, and make it a goal to save that amount as quickly as you can, in order to have a reserve outside of your monthly income for paying unexpected bills. Further, make it a goal to replenish this fund, when and if it must be used.
Remember that your emergency fund is a dedicated fund for truly unexpected expenses. It is not meant to pay for that on-sale outfit, or that discounted tool, that you just have to have. Those are wants, not needs. Having an emergency fund enables you to stay on track with your budget, and still deal with unexpected costs.
A household which fails to budget, generally, fails to save. It does little good to set aside emergency money, and then not operate on a spending and savings plan. A good budget will anticipate some of the circumstances that lead to overspending.
When you budget for appliance repair, auto expenses, and medical expenses, then there is money set aside for those issues. When you expend for an auto expense, you will pull first from the reserve that has been allocated to that area, and then, fill in from your emergency fund, if needed. By anticipating unexpected costs, and saving for them, you will further avoid overspending.
~Emotion and Influence
In spite of a good budget, and a dedicated emergency fund, an individual or family may find they overspend due to emotions, influences, or both. One of the biggest culprits, appealing to both, is the advertising industry. Using influence of actors, together with emotional overtones, advertisers talk many people into buying things they don’t really want or need.
Additionally, friends, family, or colleagues may influence people to spend on anything from lottery tickets, to lunch at an expensive restaurant, to a snazzy new vehicle. Emotion plays a role, when you shop in order to overcome loneliness, boredom, and depression. Perhaps you will shop out of excitement or happiness. Regardless, emotions and influence can divert people from a disciplined standard, to a sudden and unexpected, unplanned expenditure.
If you are to maintain financial freedom, and to stay afloat in economically difficult times, spending must be monitored. Overspending takes a toll on household finance, and as a result, affects family relationships, as well. It will take discipline and determination to curb overspending, as you battle the influences that cause it. Set guidelines for yourself in order to curb spending based on influence and emotion. With a little strategic planning, you can make sure that the month doesn’t overrun your supply of money.