Over-Budgeting Can Help You Save!

   

You know the best part of estimating/budgeting/forecasting. It’s that you overdo it, practice over-budgeting or are too conservative and at the end, you end up saving more! I try to analyze my upcoming expenses and see how much I’ll be able to save or not save so that I am prepared mentally.

A Specific Expense

 

So when the summer began, I took our income minus the expense to see what would be left. What are the types of extra expenses that can occur in the summer? To list a few are increased energy cost because of hotter weather and more air condition usage, increased gas cost for your car because historically gas prices go up in the summer and people drive more because of vacations and such. Check out this chart below (click to enlarge) from Gasbuddy.com that shows prices peaking in the summer for the past 18 months:

People use more water in the summer too to hydrate wash their cars, and the lucky ones who have swimming pools, lol.

Over-Budgeting = Unexpected Savings!

 

So I had a couple of weekend trips planned and took them with my family during the summer.  I over-budgeted by a few hundred dollars because I drove to these places and didn’t know how much I would drive in and around my destination during my trip. Also we didn’t exactly determine how much we would spend on things like food, shopping, gifts for people back home, etc. The bottom line is that I thought I may end up spending a lot more than I actually and now that the summer is far over the result is I have more money left over than I thought I would, SCORE! I guess you could say this is a psychological trick that one can use for saving. Or maybe kinda sorta like finding loose change between your sofa cushions or a wrinkly $20 in your jeans after you washed them so you gotta unfold it and let it dry overnight, but it’s still money I can use, lol! The dangerous part is that you don’t want to over-budget so far out that it has no basis or rule of thumb. My basis for the “summer trip(s) budget” was the amount I would spend one big week or week and a half long vacation.




 

 

Unexpected Expenses Too 🙁

 

Budgets are useful only when the numbers behind them are reasonable and meaningful. And what is reasonable is to engage in over-budgeting and allocate for unexpected things. This is because life has a way of throwing us a curve ball (more often than not) which can be a leaky roof, an unexpected invite to a wedding, or you just found out that your car battery died and need to replace it. Rarely, when a month comes and goes and you don’t incur an unexpected expense, then it results in extra-savings! And when you do this exercise and over-budget resulting in unexpected funds left over, make sure to do something wise with it….like SAVE it, hence the subject line for this post!

Simple Money Man (SMM)

2 Comments

  1. I totally agree that over budgeting it super helpful. Although most of the people that I know have grandiose plans for the month or year that don’t turn out as well which means that they over budget. I can admit there are certain categories that I unexpectedly went over. Oh well, I try to learn a little more from it each month.

    Thanks for sharing!!!

    • Yes sometimes we think we over-budgeted and were conservative, but end with with something unexpected come up anyway. I guess that’s life, but we should learn from that and revise based on past months and years as a new basis.

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