How to Get Control of Your Budget

Posted by Jill on July 8, 2009

About the author: Jill graduated from college two years ago. Since then she has developed a passion for personal finance. She’s currently studying for the Certified Financial Planner (CFP) exam, and hopes to become a full-time financial planner.

Establishing a Budget

When I first became interested in personal finance in the fall of 2007, one of the first things I did was create a budget and tracking system. It allowed for savings, Roth IRA contributions, housing, and other categories such as food, transportation, clothing, etc.

Unlike many people who find that their first attempt at a budget is not realistic, my budget was actually pretty accurate and usable from the very beginning. Over a year later, my monthly budget is only slightly different from the very first one! So, post over, I’m awesome, right?

Wrong.

Blowing the Budget

I would say that I actually stick to my budget 100% perfectly (that is, come in on or under budget in every category) only about 10% of the time. Another 50-60% of the time, I might go over in a few categories, but still keep my total spending under the planned total.

And then there are the times where I just fail – for one reason or another, I allow my total spending to exceed my planned spending for the month. I always know when this is the case – my very detailed tracking system allows me to see how much money I have available at any given time.

When I know I have $20 available and then I spend $35 at a dinner I felt I couldn’t say no to, I have officially gone over. Even that wouldn’t be so bad, if only I stopped there.

But I recently noticed a recurring problem – once I complete the transaction that pushes me into the red, I cease to remember I have a budget at all. I spend, spend, spend: new dress here, extra dinner out there, and on and on. The initial $15 over budget turns into $50, $80, even $100 or more. Once I relinquish that first bit of control, I unleash a spending monster!

Getting Control of the Budget

Here are three things I’ve done recently to tame the spending:

  1. Increase my budget slightly. This seems counterintuitive, but I realized that when I go over budget, I go way over. In general though, I work hard to stay under budget. Giving myself a little breathing room so that that one extra expenditure is still within my planned spending actually ends up saving me money in the long run!
  2. Institute no-spend days/weekends. When I realize I’m running low in certain categories or overall, I institute no-spend days. This means no money physically leaves my bank account; I am still allowed to use things I have already paid for like gas and cable. Other than that though, I can’t spend a dime, so I have to make meals using existing groceries, watch TV or movies that I already own, and only go out for free entertainment such as museums (I live in DC).
  3. Be honest with those around me. In the past one of the reasons I’ve overspent is because I don’t want to look like I either don’t have money or like I am too obsessed with saving money. After all, I’m only 23, not a very popular age to say “I’m going to stay in tonight.”

    But I have recently started discussing my financial goals and current status with my boyfriend and closest friends. After a particularly expensive weekend last weekend, I flat out told my boyfriend, “I have only $20 until my next payday. I can’t spend any more than that. Period.” It was the first time I had been quite so frank.

    I also make an effort to tell my friends that I am saving for things like an upcoming licensing exam, new furniture, and an eventual car, so that they understand when I have to turn down expensive outings.

These things aren’t easy, especially the last one. But in the end, they’re better for my bottom line. Everyone goes over budget every now and then. It’s what you do next that matters. The trick is to focus on spending as little as possible after the budget-buster occurs.

What do you do to keep your spending under control?





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Comments to How to Get Control of Your Budget

  1. Wow! This hit home for me. I was reading your article thinking I could have written it myself. I do exactly the same thing. If I mess up once, I forget about a budget completely, just like a forgotten diet.

    Thanks for the pointers. I will give those ideas a try!

    Anne Marie

  2. I’ve been trying to get my spending under control for 10 years now – I’m horrible. And credit cards don’t help either. I’ve recently revaluated my budget and it matches your tips here – although I have already failed once, I’m going to try to stay strong.

    Jacksonville Fence Contractor

  3. Thank you very much for this article because to many of us have this same problem and some times even worst. I will put this idea to work and I know it will help.

    http://www.fencejacksonville.com/

  4. Madison – I enjoyed Jill’s guest post on budgeting. Is she willing to share her detailed tracking system with the rest of us?

    Thanks.

    Jason

  5. Jason, that’s exactly the question I had. I would love to know more about her detailed tracking system. Nice article. Glad I found your blog.

    Tammy

  6. @Jacksonville Fence Contractor failure happens – it’s what you do next that matters. Keep it up!

    @Jason and Tammy If Madison will host it I’d be happy to do another guest post detailing my tracking! Otherwise I can email you two separately.

    Jill

  7. @Jill: I would love for you to email it to me but I am hesitant to put my email in a public forum such as this. Thoughts? I know Madison probably has it as I receive her email updates…….

    Jason

    Jason

  8. @Jason: if you send your email address to Madison through the “contact” link at the top of the page, she can forward it on to me, or I give her permission to send you my e-mail address. This may take a few days if she’s out of pocket with the impending new arrival 🙂

    Jill

  9. Thanks, Jill. I have emailed Madison per your request. Look forward to hearing from you.

    Jason

    Jason

  10. Has anyone used the new “Mortgage Equity Accerator” as a tool to reduce debt? It’s my understanding this practice was established/used in Australia since 1997. There have been recent reports/plugs on the news referencing a truth in equity website. Just wondering if anyone has weighed the pros and cons. Thanks

    Ann

  11. Glad the article was helpful for everyone! Thanks for sharing it Jill.

    I’d be happy to feature another guest post of Jill’s in the future to explain her detailed tracking system… stay tuned!

    Madison

  12. That last one is KEY. When I was your age I never did that – and I’m STILL paying the credit card debt thanks to my lack of guts.

    brooklynchick

  13. Budgeting is certainly a challenge. Every month, “something” comes up that potentially blows the budget. I’ve tried various budgeting systems, but discovered an intuitive system that is really helpful. It has helped with preparing for those untimely situations and it has helped significantly reduce our debt and increase the balances in our deposit accounts. But mostly it helps us stay on the wagon and keeps us motivated. I’ve posted information about it at my website and I see there is a “review” here in My Dollar Plan. The website is http://www.ynab.com

    FindingFrugal

  14. I’m also interested in becoming a CFP. Did you have to take classes too? I thought that was one of the requirements.

    Linda

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