How to Manage a Flexible Budget as an Overspender

Overspending isn’t just a habit—it’s a lifestyle that can sneak up on you and leave you feeling drained, both financially and emotionally. 

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If you've ever found yourself staring at your bank statement, a sense of dread washing over you and a pit in your stomach, wondering where all your money went or how you managed to spend your entire paycheck on things you can't even remember buying, pull up a chair and let's talk.

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First off, let me assure you that you're not alone. We live in a world driven by consumerism and many people struggle with overspending and feeling disconnected from their financial goals and habits.

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The budgeting process can feel like a chore, especially when you have a tendency to spend without a plan. If you're anything like me, you might have tried different budgeting methods, only to feel stifled and frustrated when you couldn’t stick to them. 

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Why Traditional Budgets Make Us Want to Scream

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Let's be real for a second. Traditional budgets are like the one-size-fits-all crash diets for your wallet. They promise amazing results and healthy finances, and it may work for a little while, but two weeks in, you're face-first in a pile of receipts, ready to give up and binging on all the things you've been denying yourself. 

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Imagine it's a random Tuesday, and you're strolling past your favorite store. There's a sale sign in the window, and your heart starts racing, your palms get sweaty, and before you know it, you're at the checkout line. Your arms are full of stuff you definitely don't need but absolutely must have. And, your budget? It's somewhere in the corner, crying. Or, you attend your local artisan market, the vibrant energy and creations are speaking to you and you spot a handmade pottery piece that would be perfect for your home. Your heart says yes, but your mind reminds you of the strict budget you set. In scenarios like these there is often a purchase followed by guilt.

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The push-and-pull between desire and discipline can create a toxic relationship with money and lead to a scarcity mindset. And, constantly focusing on what we can't have or do can bleed into other areas of our lives, affecting our overall well-being.

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Traditional budgets don't account for the fact that life happens. They are too rigid, too restrictive and are not fun.

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What if I told you there’s a way to budget that removes the tight shackles and is more aligned with your needs, goals, and lifestyle?

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Enter Flexible Budgeting: The Yoga Pants of the Financial World

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Flexible budgeting is like the friend who keeps you grounded without being too overbearing or the comfortable yoga pants that are structured enough to keep everything in place, but with plenty of room to breathe allowing you to easily adapt to unexpected twists and turns. 

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In simple terms, it’s a budgeting method that allows you to adjust your spending categories as needed, based on your actual income and expenses. Unlike traditional budgets that set monthly fixed amounts for each category, flexible budgeting acknowledges that life is unpredictable, and your budget should be too.

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For example, if you’ve budgeted $200 for groceries but find that you’ve spent $250 due to a get together you hosted, flexible budgeting allows you to pull funds from another category—maybe entertainment or dining out—to cover the difference. The idea is to stay within your overall budget while making specific changes in certain areas.

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Why Flexible Budgeting Can Work for Overspenders

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You might be thinking, “Won’t flexible budgeting give me an excuse to spend more?” Great question, and yes you may run into that challenge, but self discipline is a part of the process and there are ways to approach this type of budgeting correctly. When done correctly, flexible budgeting can actually help you become more mindful of how, where and why you spend. Here’s why it might be the right money management approach for you:

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It reduces the guilt and shame cycle: Raise your hand if you can relate to beating yourself up because you purchased something that was "unnecessary". ✋🏽 As an overspender, you’ve probably experienced the guilt that comes with exceeding your budget. This guilt can lead to a cycle of shame, where you feel like you’ve failed, so you give up on budgeting altogether. Flexible budgeting helps break this cycle by allowing for adjustments, which means you’re less likely to feel like a failure if things don’t go exactly as planned.

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It encourages mindful spending: With this method you are constantly reevaluating your spending and making intentional choices about where your money is going. This process can help you become more aware of your spending patterns and any adjustments you need to make to align your habits with your financial goals.

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It’s more realistic and adaptable: We all know that life does not always follow a neat set of rules and is not always predictable, so why should we expect that of your budget? Unexpected expenses—like car repairs, medical bills, or last-minute trips—can throw a wrench in even the most carefully planned budget. Flexible budgeting takes this unpredictability into account, making it a more realistic approach for those who struggle with sticking to a rigid budget.

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It aligns with your values and priorities:  It’s your money, so you get to prioritize spending it on what matters most to you. If you want to live a life that aligns with your values, flexible budgeting allows you to allocate your resources in a way that supports those values. Maybe taking vacations and lavish experiences are more important to you than material possessions. Instead of forcing yourself to stick to a predetermined clothing budget each month, you could allocate more money towards a "travel fund" and less towards shopping.

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Now that we understand the basics of the flexible budgeting approach, let's dive into how you can make this approach work for you!

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Implementing Flexible Budgeting

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Step 1: Get Real with Your Data

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This step might feel a bit uncomfortable, especially if you've been avoiding looking at your bank statements and numbers, but trust me – it's crucial that you take the time to do this first! Before you can create a flexible budget that works, you need to get honest about what your money is currently doing and get to know where it is all going. 

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1. Gather: Collect your bank statements, credit card bills, and any other financial documents from the last three months.
2. Categorize: Go through each transaction and group them into broad categories. Common categories include housing, transportation, groceries, dining out, entertainment, savings, and debt repayment. I like to keep it simple with just four main buckets—Fixed Expenses, Debt Repayments, Discretionary Spending, and Savings. I lump all of my variable and miscellaneous expenses into Discretionary Spending because it works for me and helps me stay on track without overcomplicating things. However, if you’re budgeting for the first time or getting back into it after a break, I recommend breaking down your categories more specifically. This will give you a clearer picture of where your cash flow is and help you identify patterns and areas where you might need to adjust. 
3. Calculate: For each category, calculate your average monthly spending. First, add up the amounts you've spent in that category over the last three months. Then, divide the total by 3 to find your average monthly spending for that category.
4. Identify: Don’t forget to identify all of your income sources and determine how much money you have coming in each month.

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Step 2: Define Your Financial Goals and Values

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Now that you have a clear picture of your current financial situation, it's time to think about what it is you really want from your money. What are your ‘WHY'S’? I recommend taking some time to sit quietly and reflect on these questions:

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• What are your short-term goals? (build up your emergency fund, pay off a credit card, save for a trip, etc.)
• What are your long-term goals? (save for retirement, buy a house, pay off student loans, etc.)
• What experiences or things bring you the most joy and fulfillment?
• Are there areas where you feel you're spending money without getting much value in return?

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Note: If you have a journal, it’s time to pull it out. If not, a piece of paper or sticky note works fine. Write down your answers and keep them somewhere visible. Write down as many goals as you’d like, but remember not to start tackling them all at once to prevent getting overwhelmed. These will be your guiding light as you create and adjust your flexible budget.

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Step 3: Create Your Flexible Budget Framework

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Alright, now we're getting to the good stuff! It's time to create a budget framework that gives you both structure and flexibility. Here's how to do it:

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Start with your nonnegotiables: These are the essential expenses that you need to cover no matter what. This can include your rent/mortgage, utilities, minimum debt payments, and basic groceries. Add up these costs and subtract them from your monthly income.

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Set your savings targets: Based on your goals, decide how much you want to save each month. This might include emergency fund contributions, retirement accounts, or savings for specific goals like a vacation or a new car. If you are an entrepreneur, I’d also recommend contributing to savings buckets specifically for your business (business cushion money, taxes, yearly subscriptions, professional development, etc.).

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Allocate funds for your joy categories: Look at your list of things that bring you joy and fulfillment. Assign a portion of your remaining money to these categories. Remember, the goal is to spend mindfully on things that truly matter to you.

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Create a flex or splurge fund: This is where the magic happens! Take whatever money is left after your nonnegotiables, savings, and joy categories, and put it into a "flex fund." This is your guilt-free spending money that you can use however you like throughout the month. How does that sound?

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Once you’ve set your categories, it’s time to allocate your income to each expense. Start with your fixed expenses, as these are non-negotiable, then allocate money to your variable expenses based on your priorities and goals for the month. Use the average amounts you calculated earlier to get you started.

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Here's an example of how your framework might look:

• Monthly Income: $4,000
• Nonnegotiables: $2,000
• Savings: $500
• Joy Categories: $800
• Flex or Splurge Fund: $700

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Step 4: Put Your Flexible Budget to Work

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You have your framework, but now you have to put it into action. Here are some strategies to help you stick to your flexible budget:

• Use the cash envelope system or use a separate card for your flex fund: At the beginning of each month, withdraw your flex fund money and put it in an envelope, or transfer it to your 'flex fund' card. Personally, I use what I call a guilt-free spending card, where I allocate money specifically for my splurges or 'whatever I want' moments. When the money is gone for the month, it's gone until I can replenish it!
• Give yourself at least 24 hours: When you're tempted to make an unplanned purchase, wait 24-48 hours before deciding. Time is your superpower to curb impulse spending.
• Practice mindful spending: Before making a purchase, ask yourself if it aligns the values and goals you listed. Will it benefit you in the long term or is it just momentary satisfaction?
• Perform regular check-ins: Set aside time for planned money dates each week to review your spending and make adjustments as needed.
• Celebrate your wins: Always acknowledge when you make progress towards your financial goals, no matter how small the win is. It’s important to remind your brain that you are on the right track.

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Note: You can use a spreadsheet to help you track your spending and present a clear financial picture automatically or you can use an app such as MyBudgetCoach, which allows you to easily manage your budget and project how spending can affect future months. The most important thing is to find a tool that resonates with you the most.

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Step 5: Embrace the Flexibility

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Life happens, priorities shift, and your budget should be able to move right along with you. Here are some situations where you might need to roll with the punches when it comes to your budget:

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• Unexpected expenses: We've all been there - the car engine light comes on or your tooth decides it's had enough. If something comes up that you didn't plan for, start by dipping into your flex fund first. If that's not enough, consider temporarily reducing your allocations to your joy categories or pulling from your savings (that's what it's there for).
• Unexpected income: We all love when money falls from the sky! Got a bonus or tax refund? I know it may be tempting to go on a shopping spree, but try to resist the urge to spend it all. Consider putting a portion towards the financial goals you set and using the rest to treat yourself. You deserve it.
• When your heart pulls you in a different direction: Maybe you've discovered a new hobby, are considering a career change or you've decided to prioritize paying off debt. Whatever it is, your budget should reflect your priorities and what matters to you now. Don't be afraid to shuffle things around - your budget should work for you, not the other way around. 
• When the seasons change: There are some times of the year that are harder on our wallets than others (hello, holiday season and months where there’s a birthday every other day!) Instead of stressing out every December, why not plan ahead? Plan for these fluctuations by increasing your flex fund during those spendy months.  

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Remember, the goal is progress, not perfection, and your budget is a living, breathing thing. It's okay if things don't always go according to plan – that's why we're keeping things flexible!

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Common Pitfalls and How to Avoid Them

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While flexible budgeting can be a great tool for over-spenders who want to balance structure with adaptability, there are some challenges and tricky spots I want you to watch out for:

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Using flexibility as an excuse: As mentioned earlier, one of the risks of flexible budgeting is using the flexibility as an excuse to overspend. It's important that you set some ground rules for yourself. Maybe you only move money around if you're under budget somewhere else. Another strategy is to set a cap on how much you can reallocate within a month. For example, if you find yourself needing to reallocate funds, you might decide that you won't move more than $50 from your other budget categories in one month. This ensures that your flexibility remains a helpful tool rather than giving you permission to overspend.

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Neglecting to keep your savings sacred: I get it, that savings account can look pretty tempting when you want to splurge. But remember why you started saving in the first place! You don’t want to derail your long-term financial goals, so make sure they are a priority in your budget and resist the urge to tap into them for everyday expenses. Try to think of your savings as a separate entity, and if possible, use a completely separate bank for your savings account so you’re not tempted by seeing it every day.

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Avoiding your financial reality: Flexible budgeting, and proper financial planning in general, only works if you’re keeping tabs on where your money's going. Make it a habit to check in on your spending at least every other day. And, it doesn't have to be a big deal - just a quick peek to keep yourself on track is more than enough for daily money dates. Otherwise, it’s easy to lose track of where your money is going and overspend without realizing it. 

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Not reviewing and adjusting: A flexible budget isn’t something you will set up and forget. Remember, when life changes, so should your budget. Failing to review and adjust your budget regularly can lead to overspending and financial stress. To make this process enjoyable, incorporate things you love while spending time with your finances and evaluating what’s working and what needs tweaking. For example, I like to have monthly budget dates with a cup of coffee, soft music playing in the background and my journal. If lighting candles and playing music helps you get into a good headspace, then go for it!

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Support For Your Flexible Budget Journey

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As someone who's been where you are, I know how overwhelming it can feel to battle with overspending and all of the internal and external consequences that come with it. That's why I became a financial coach – to help other people like you find peace and purpose in your financial life.

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Our relationship with money and how we spend goes way deeper than just numbers on a spreadsheet or the numbers we see in our bank accounts. It's tangled up with our emotions, our past experiences, and even our sense of self-worth. I take a holistic approach in my coaching, where we certainly talk about practical stuff like budgeting and saving (and yes, that includes flexible budgeting), but we'll also dig into the 'why' and mindset blocks behind your spending habits. 

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My goal is to help you transform the way you spend, manage, and save your money—without the restriction, working together to move you from reactive to proactive spending, breaking that cycle of overspending and avoiding your bank accounts. We'll approach budgeting in a way that makes your money work for you, not against you. No judgment, no shame.

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Now, I know taking that first step can be scary, but no matter how many tips I give you, if you don't address the issues below the surface, it will be hard to stick to them. That's why I'm here to help you get started and walk alongside you every step of the way. If you're feeling ready to dive in, I'd love to work with you one-on-one through the MyBudgetCoach app. On the user-friendly app, you'll be able to divide and flex your money between categories that align with your lifestyle and goals, create stick-with-able plans and track your progress. It's a great tool, but the real magic will happen in our conversations and once you have a system.

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Final Thoughts

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Flexible budgeting has been a game-changer for me, and if you identify as an overspender who does not like being tied down by a traditional budget, it will allow you to take control and become your own finance team. By understanding your spending habits, setting flexible limits, and adjusting as needed, you can find a balance between enjoying life and managing your money responsibly.

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As you move forward, keep these key points in mind:

• Stop hiding from your bank statements and face your spending habits head-on. 
• Align your budget with your heart and goals. If lattes make your day, budget for them! 
• Give yourself permission to be flexible and shift things when you need to.
• Mindful spending is your new mantra. Think before you swipe.
• Show yourself some compassion and patience. You'll have ups and downs, and that's okay.
• Judgment-free support is available to you if you need support with getting started.

You've got this! Here's to creating a dream life on your own terms, one mindful purchase at a time.