If we are being honest, we all go over budget in certain categories on occasion. But sometimes, we start seeing trends of a consistent budget leak.
Budget leaks have been a constant struggle for us over the years. Sometimes what we’ve seen as small leaks have accumulated to large dents in our budget. It’s amazing what few $5 and $10 purchases can do to a budget. Especially a budget that is super tight already.
You may constantly overspend at the grocery store, take part in retail therapy too frequently, or enjoy going to dinner and a movie too often. Whatever it is, budget leaks can ruin your financial plans.
So what do you do when you discover a leak in your budget?
Take action!
There are four steps to take to combat budget leaks.
1.Track Your Spending Diligently
Use a notebook or an app like Dave Ramsey’s EveryDollar to track your spending. Make sure to write down EVERYTHING. You won’t be able to see where your budget is leaking if you cheat on this step.
I used to be a paper and pencil kind of girl, but I’ve really fallen in love with Dave Ramsey’s EveryDollar. My husband and I have the free version and it is very sufficient for our needs. (Although I love the advanced features offered on the paid version.)
*I’m not an affiliate for Dave Ramsey or EveryDollar. I just love the product and highly recommend it.
2. Note the areas where you are going over budget.
Make notes of the line items you are going over budget. You may find that you have expenses which you don’t have budget categories for.
A few of the most common budget leaks include restaurants, clothing, personal spending, and groceries. However, you may find that your budget leaks are much more inconspicuous. Are you overspending online? How about
3. Switch that line item in your budget to all cash.
The quickly and easiest way to close that leak is to switch to all cash. This will give you an instant visual of what you have spent and what you have left. If you run out of funds, then you will have to wait until the next month.
I’ve found this works particularly well for budget categories like personal spending (or “blow” money in our family), entertainment, restaurants, and clothing. All of these are wants, not needs. If you overspend in these categories on a regular basis, you should switch them to cash to keep yourself accountable.
4. Check Your Monthly Bills
The last thing you need to do is check you monthly bills. Sometimes budget leaks can be ask small as overusing on water or electricity. If this is the case, watch you consumption or consider enrolling in the budget billing program so that your bill is the same each month.
You might notice your internet or television subscription went up in price. If it’s a bill that can be flexible, make a phone call. Ask if they are offering any sort of promotion that you would be eligible for. Make sure to remind them that you have been a loyal customer. I’ve found that just asking will usually amount to at least at 10-20% discount.
One last thing you should check is your insurance cost. Make sure to shop around for insurance so that you are getting the best possible price. We did this about a year ago and found that by switching companies we would cut our monthly car insurance payment by over 50%!
It definitely doesn’t hurt to do a little research.
Occasionally we will have a consistent budget leak that is due more to a need in a budget shift rather than trying to close the gap altogether.
For example you may consistently go over budget on your groceries. Not because you are buying extravagant items at the grocery store, but because you have legitimate needs.
If this is the case, then you may need to adjust your budget to add more money in this category. Don’t feel bad for doing this. It may be necessary and will instantly cure your budget leak! 🙂
Sarah @ The Teacher's Wife says
We struggle with eating out. We don’t eat out a ton, but it’s still tempting to go over. I am totally with you on cash! It helps so much. 🙂
Sarah @ The Teacher’s Wife recently posted…November Goals
Kaitlin says
Oh, I love to eat out so much! But it just doesn’t happen often around here on one-income! 🙂 It’s so much more enjoyable when we have cash in hand at a restaurant! 🙂