What to Do When You Go Over Budget

worried looking man pouring over finances sitting next to small child

During the holidays, it's easy to go overboard with spending. In fact, a 2021 survey by lending platform Affirm found that seven in 10 Americans acknowledged they typically overspend during the holidays. But overspending isn't limited to the holiday season. Another recent survey by wealth management platform Personal Capital found that more than one-third of Americans felt they exceeded their budgets in 2021.

Going over budget can disrupt your finances. For instance, it might cause you to pile up more debt. That, in turn, could lead to a lower credit score. But if you follow these three steps, you can reduce potential issues with overspending.

1. See if You Can Cut Costs

If you've gone over your budget, you can help turn things around by seeing where you can cut costs. Here are some methods to consider:

Dial Back Your Streaming Services

So, you subscribe to Netflix, Hulu, Amazon Prime Video and HBO Max. Do you need all four of those, or can you get by with just one? On average, Americans spend $273 a year on subscriptions, including streaming services, according to a 2021 survey by consulting firm West Monroe. Dropping even one streaming service can chip away at that total.

Reduce Your Cable TV, Internet and Cellphone Bills

Is it possible to drop to a lower tier of cable TV or internet service? Can you switch to a cheaper cellphone plan? Doing this may put a dent in your telecom expenses. According to a 2021 report from bill payment firm Doxo, U.S. households spend $116 a month on cable and internet services on average, while utility marketplace Allconnect reported in 2020 that the average U.S. cellphone plan cost $113.

Shop for Cheaper Insurance

You could score savings on auto and homeowners insurance by comparing quotes from several insurers. In addition, make sure you're receiving all the insurance discounts you qualify for, such as those for maintaining a good driving history and insuring your car and home with the same company.

Slash Your Credit Card Debt

To help get your budget back in shape, decrease your credit card debt and hold off on racking up additional charges. In 2020, the average credit card balance was $5,315, according to Experian data. Shaving money off this debt can help turn around your budget.

2. Stop Spending on Nonessentials

Until your budget is in better condition, you might want to skip some "nice-to-have" but not "need-to-have" items. Research commissioned in 2019 by insurance company Ladder found the average American spends $1,497 a month on nonessential items, including $209 a month for restaurant meals. Here are a few "nice-to-have" items to look at removing from your budget.

Daily Coffee Fix

Many of us stop by our favorite coffee shop each day to pick up a cappuccino, latte or other beverage. But that can be a costly habit. Brewed-at-home coffee generally costs pennies on the dollar compared with that same cup of coffee from a coffee shop. In fact, coffee drinkers who typically drink about two brewed cups a day will pay $45.90 per year on coffee, compared with $2,008 for that same fix at Starbucks, according to research from NextAdvisor.

Restaurant Meals

Eating out can be fun—and pricey. In the prepandemic year of 2019, the average U.S. household spent $3,526 on food away from home, according to the U.S. Bureau of Labor Statistics. To slice the price of food, eat at home rather than at restaurants. At-home food generally eats up less of your budget on a per-meal basis than restaurant food.


Paying for a vacation isn't a day at the beach. U.S. households that were planning a summer vacation in 2021 estimated they'd spend $2,122 on their getaway on average, according to a survey by travel insurance provider Allianz Partners USA. To reduce or eliminate travel costs, consider a shorter trip, a less expensive "staycation" or no vacation at all, at least until you've squared away your budget situation.

3. Reassess Your Budget

To get a handle on overspending in both the short term and long term, commit to creating a household budget if you don't already have one. And if you do have a budget, review it to see what you should tweak to keep spending in line.

During your budget reevaluation, keep an eye out for:

  • Changes in spending habits: Are you spending more on entertainment? Are you forking over more money for groceries? These questions can help you figure out areas where you might be able to cut costs.
  • Shifts in priorities: Are you behind on retirement savings? Do you need to earmark more money to lower your debt? Digging into the details of your budget can give you a better sense of where you might need to bump up high-priority allocations.
  • Places to step up cost-cutting: When you compare income and spending categories, you can better target ways to reduce expenses. For instance, perhaps you notice more money going toward subscriptions, such as gym memberships or streaming services, than you had realized. This might signal it's time to eliminate at least some of those subscriptions.
  • Increases in income: As you comb through your budget, you might come across more monthly income than you thought you had. Identifying this extra income can let you assign more money to things like debt reduction or retirement savings.

The Bottom Line

If you find that you've gone over budget, you're in good company—many of us catch ourselves overspending. But keep in mind that you've got a number of tools available to bring your budget back to where it should be and to track your financial health. Monitoring your credit for free with Experian is one way to see how your financial habits may be affecting your credit—and can provide a picture of your top spending categories.