When is it OK to Blow the Budget?

blowing the budgetBlowing the budget?  I knew right away that this was going to be a controversial topic but felt it was an important enough issue for a lot of people so I felt compelled to write about it.   When is it OK to blow the budget?   Ultimately that is for you to decide but I say whenever you want to as long as you are prepared to give up something in return.

A Budget is a Roadmap

The purpose of a budget is to help you to reach your financial goals and to guide you in your financial decisions.  Budgets are not set in stone and should be flexible enough to allow for some freedom in how you spend your money.  Financial and personal goals will change throughout your life and your budget should change along the way.  If you don't have a budget I encourage you to sit down with your loved ones and make one.  Start with your short-term financial and personal goals and then move on to your long-term financial and personal goals.  The goal of creating a budget is to have a healthy dialogue about needs versus wants and how to pay for them. You can develop a sense pretty quickly of whether you need to increase your income, cut spending or both.  It really is pretty simple, if you do not have the income to fund your goals you need to go back to college or gain the skills so that you may increase your income.  More importantly, if your financial and personal goals are not shared by your loved ones there is a good chance there will be conflict regarding financial decisions.

A Budget Should be Flexible and so Should You

Like the song says, you can't always get what you want.  Well at least most of us can't.  Struggles over personal finances usually are a result of an inability to reconcile the difference between needs and wants.   Inevitably you will encounter a situation that will require you to make a decision about spending more money than you had planned.  How you handle this situation will have a determining factor on whether you will reach your long-term goals.  In other words, you will need to decide if spending the extra cash now is worth the impact on your future goals.  Is that latte or pair of shoes worth having to eat spaghetti and left over meals for a week?  Or will you decide that you will have the shoes and your steak dinner and worry about retirement later?  Only you can decide that.

So when is it OK to blow the budget?

Let's face it, if you are blowing the budget every month that is never OK.  If you did the work and crafted an honest budget then the budget will guide you in your day to day decisions.  If you did not do the work necessary to develop a real budget then you will struggle to achieve your financial and personal goals.  There is a parallel in the fact that the US Government is now belatedly coming to terms with the fact that it has lived well beyond it's means and will have to make some painful cost cutting measures as a result.  Hopefully you do not find yourself in a similar situation, loaded with debt from financing a lifestyle you could not afford.  If you do, seek credit counseling immediately, cut spending, and increase your income.

A budget is a tool that we use to help guide us to our goals so take the time to craft a good one and stick to it!

When did you last  overspend?  Did the experience change your spending habits?  Leave a comment!

 

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9 Responses to When is it OK to Blow the Budget?

  1. Briana @ 20 & Engaged 09/09/2011 at 8:37 pm #

    I can’t remember the exact last time I overspent but I know I felt awful! It was on food. Emergencies came up and it just wasn’t worth it. A budget should be flexible but it also should keep you disciplined.

    • Paul 09/10/2011 at 12:00 am #

      I agree with you Briana. If you don’t work hard to stick with your budget you will have a tough time reaching your goals. That means sacrifice when you would rather splurge. At the same time if it is not flexible for emergencies or the occasional impulse purchase, you probably won’t stick with the budget anyway.

  2. Lisa @ Cents To Save 09/07/2011 at 8:32 pm #

    Since my recent unemployment, I have shifted my budget around. I use to have automatic savings taken out and transferred to ING into sub-accounts. Those are now on hiatus. And the last time I blew my budget was……. probably when I bought a new SLR camera. On credit. Oopsie!

    • Paul 09/08/2011 at 4:43 am #

      Sorry to hear about your unemployment Lisa. I wish you success in building new income streams, maybe this is an opportunity for your blogging business.

  3. Jen @ Master the Art of Saving 09/03/2011 at 7:44 pm #

    I can’t really think of the last time, unless you count the trip to the casino. Evil, evil casino. I had to take the money out of my ‘Opertation SUV’ fund, which was a large chunk of it. I feel the pain each time I see the balance. Normally though, we just lower spending in other areas.

  4. Crystal 09/03/2011 at 3:06 pm #

    We have backup savings accounts for categories like entertainment, so we technically never have to go over budget since we save whatever we don’t use other months so it’s there to use on big months. 🙂 It’s all about money manipulation, lol.

    • Paul 09/03/2011 at 3:25 pm #

      You are so right Crystal! A budget without a little wiggle room is no fun 😉

  5. krantcents 09/02/2011 at 7:56 pm #

    Good points! One of the things I generally do with budgets is include a little extra money in miscellaneous. You can use it for fun, monthly surprises, or aberrations.

    • Paul 09/02/2011 at 11:55 pm #

      Ahh the miscellaneous category. You are absolutely correct about needing to include some flexibility in your budget.

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