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Have you ever reviewed your budget, only to have an absolute panic attack?

As hard as this is to admit, I made a HUGE budgeting mistake a couple of weeks ago.

At a minimum, I review our budget on a monthly and quarterly basis. At the end of every month I review that month’s budget and determine where we went wrong and where we could do better. I do the same on a quarterly scale but more in-depth to make sure we’re on track for the year and figure out if any changes need to be made.

Last month, as I was reviewing our budget and our savings accounts, I realized that we were short. $18,000 short, in fact. To say that I was horrified is an understatement.

If you’ve ever made a budgeting mistake of any kind, you probably feel my pain. But what you do next will make all the difference.

What to do when you realize you overspent

Don’t panic

Panicking gets you nowhere. Maybe you’re like me and eat a container of Oreos whenever bad things happen, or maybe you prefer to take your worries out elsewhere, but really, where does that get you? By keeping a level head (I know, I know. It’s easier said than done.), you’ll be much better off in the long run.

Check for mistakes

The first thing I did was call my husband, who was traveling for work. I’m sure he loved that phone call, but for the life of me, I couldn’t figure out where we had gone wrong. I knew we were currently budgeting $1,500 a month for our savings fund, and I knew we had missed a few months at the end of the year. But $18,000?!? Where had we gone wrong?

Of course, my husband had no idea where we had gone wrong because I typically handle the budget (and he was out of town with no access to our records). Eventually, I reviewed our budget from 2014 and realized that we had saved $1,000 a month that year, and we began saving $1,500 in 2015. That accounted for $6,000, meaning that we were $12,000 short. Still shocking, but better than $18,000.

Review your budget

Our budget is tight. Probably too tight. Trying to save $1,500 a month on one income, in addition to making mortgage payments (one for the house and one for the farm), car payments, saving for retirement, saving for our kids’ college funds, and still having enough for groceries and life is not easy. Even so, we have an end goal (building a new house with cash in five years) and we want to make it work.

As you’re reviewing your budget, think about your goals. Is everything in your budget helping you reach your end goal? If not, what could you cut?

  • Are there any unnecessary expenses that you’d be willing to do without?
  • Are there any categories that you just don’t want to cut (maybe you want to occasionally splurge on a dinner with the family and your current budget doesn’t allow for it)? We reviewed our budget and discussed what we could cut (our land line and cable) and what we wouldn’t (dining out once a month and the occasional pizza).
  • Make sure that your overall budget is realistic. Trying to spend $150 a month on groceries when you currently spend $500 is not realistic. Even if you think something might be achievable, like cutting your grocery budget, try to work toward it in baby steps.
  • Get creative. Is there another option? For example, create a flex category.

This is where we went wrong in our budget. Our budget balanced. Unfortunately, when it balanced, it left no wiggle room. If we overspent in a category, we had no choice other than pulling money from our rainy day fund or skipping our monthly contribution to our house fund. Since we weren’t willing to give up our occasional family pizza party (and I may have gotten a little carried away on our Amazon purchases), our house fund ended up suffering.

Create a new plan

Spending an evening to create a budget with your spouse may not seem like the most romantic way to spend your night, but it’s so valuable. If you make the budget by yourself like I used to do, you’re getting a one-sided view of your budget and you’re setting yourself up to fail.

Maybe you see no issue with slashing your spouse’s coffee budget, but that’s the one thing that keeps him sane in rush hour traffic. Sure, he could make coffee at home. But, if you discussed your reasoning and came to an agreement about how you would use those funds, he would be much more likely to agree to skip his daily coffee stop. Compromise goes a long way in budgeting.

By discussing the budget and agreeing on it together, you can come up with a plan and hold each other accountable. Make a game of challenging yourself to save. If you’re feeling competitive, give your spouse a small “fun money” budget and give yourself a comparable budget. At the end of the month, see who spent less. The winner (saver) gets a ten minute back rub, and you both get the bonus of extra money in your savings account.

Make continual changes to your plan

Even after you have a new plan for your budget, continue to review it with your spouse. Find out what you’re doing well and what’s not working. Make sure that every dollar is accounted for. If you have any extra money, apply it to your goals.

Thankfully, we’re typically able to save more in the first quarter than the last quarter of the year, so I was able to transfer an extra $6,000 to our savings account. We’ll have to make up the last $6,000 during the rest of the year, which won’t be easy, but with more planning, we’ll be able to stay on track.

Try to do more of the good things, saving money where you can, and earning more if that’s a possibility. Then, try to take an objective look at what’s not working. How could you improve? What is causing you to go over budget in those areas?

Think of sneaky ways that you can save money even when you’re spending it, like putting regular purchases on a cash back rewards credit card (always pay this off in full at the end of the month) or shopping with Ebates. If you can, try to earn extra cash on the side (I started doing mystery shops to earn extra cash when I grocery shop). While these aren’t “get rich quick” schemes, every little bit adds up.

Budgeting, especially when you find an error, can be scary. But it doesn’t have to be. Work together with your spouse to create a plan that works for you. Also, don’t forget to review it regularly!