How to Cope with Budget Blow-Ups

Despite the best laid plans of mice and men, there are times when the unforeseeable just waltzes into your life and poops on your budget. Sure you have a budget of $400 a month for groceries. But then:

    • Your brother and sister-in-law and their four kids came for a week.

 

    • Or when you least expect it, your best friend announces she's getting married and you have to find a way to pay for a $200 dress.

 

  • Or you find out your kid is failing math and the only way to pull his butt out of the fire is with a tutor that'll cost you $60 a week.

Friends and family can be your worst enemies when it comes to staying on a budget. It can be a real struggle not giving into to the pressure to go out for dinner, see a movie, or come to a shopping-party where you'll be expected to lay out some dough. They aren't trying to mess up your budget, they just want to have fun. And it can be frustrating to watch your pals say they've trimmed their budgets even as they head out for a day of mall grazing.

The Curveball Account
One of the best ways to cope with life's constant financial challenges is to have a Curveball Account. This isn't your emergency fund, which you need for major disasters. This is just a slush fund from which you can draw when unexpected expenses come whizzing at you at 60 miles an hour and you don't want to throw your budget totally off track. Whether you deposit a little or a lot into this account every month, it can be a real budget-saver.

And if you move all the money you “save” by shopping smartly into this account right after you haven't spent it, it'll grow even faster. So the next time you save 50¢ on a coupon, go home and drop that 50¢ into an “I'm-a-Smart-Shopper Jar” and then deposit all those savings to your Curveball Account at the end of the month.

If your slip is minor, you can always cut back on something else in the short-term to get things back on track. So that'll be less coffee or you'll take a pass on a night out with the boy so you can rebalance. But if the expense is a whopper — a major car repair when you simply haven't accumulated enough in your car-repair account — you may have to borrow from your emergency fund to pay the bill. Then you'll have to trim your spending throughout your budget so you can crank up the automatic transfers to your emergency fund to get it back to where it was.

Short-Term Cutbacks
Over-spending may mean you'll have to balance by under-spending: All those things you routinely buy each day may have to go. Here are some other ways to compensate for over-spending:

    • No Spend Days are becoming increasingly popular among the frugal set as a way to focus on where the money is going by eliminating the automatic itch to spend. Assigning one day a week as a no-spend day may wake you up to all the ways money disappears, while shoring up your bank account.

 

    • Use those points you've accumulated on your loyalty cards for things that you would normally have to buy so you can use that money to start or boost your Curveball Account. Airmile points can be redeemed by grocery coupons. Use the coupons for grocery shopping and use your grocery money to boost your Curveball Account.

 

    • Give up a vice for one month: no wine, no beer, no ciggies, no candy-bars, no potato chips, no __________________ (insert your weakness here). Once you have the $75, $150, $500 you think you need in your Curveball account, you can go back to your vice if you really want to.

 

  • Sell something. Y'know that sewing machine you never use, that guitar you never play, that exercise bike you never ride? Wouldn't you rather have the money in a Curveball Account so you're not twisted in knots every time something unexpected comes at you? Have a garage sale, take your stuff to a consignment shop, sell it on e-bay or Craigslist. Bank the money.

Your turn: How do you keep your budget flexible while keeping it on track?

More about...Budgeting, Psychology

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Jonathan
Jonathan
9 years ago

This seems like overkill. An emergency fund, plus a “curveball fund,” plus a “car repair fund,” and all in separate accounts? This seems like a sure recipe for stress-induced illness, if only from agonizing over how to account for each unexpected expense.

Tara C
Tara C
9 years ago

I have a curveball account – I have small amounts regularly transferred from my checking to my savings. It’s small enough that it doesn’t put a dent in my budget, but it builds up over time so I can deal with a last-minute unexpected expense. I keep my actual emergency fund in a different account so they don’t get mixed up.

krantcents
krantcents
9 years ago

Life is not perfect. If you plan your budget as though everything must go perfectly for you to meet your goal, you will be disappointed. I recommend a little room in your budget for the unplanned. It is called a contingency plan or plan B, because you do not have control over everything.

Mikey
Mikey
9 years ago

I have separate savings accounts. My passion is dog training and competing, so I have a “Pets” account to cover sports injuries to the dogs, a “Vacation” account which covers travel to major competitions, “House”, and “Car”. Then there’s regular savings and money market. It’s a little ADD, but it really helps me stay on track to divide up the savings and track things seperately. I used to think I wasn’t saving enough, but it all adds up to about $2600 a month.

Pat S.
Pat S.
9 years ago

Life happens. My wife and I have started itemized savings accounts for a great deal of disparate purchases, and are diverting a little bit every month, slowly building up these funds over time for when unexpected expenses come up.
Pat
http://compoundingreturns.blogspot.com

Karen
Karen
9 years ago

I do this. I have an emergency fund that I don’t touch except for in a true emergency. Then I have a slush fun savings account. The slush fund one is funded by whatever is left in my checking account at the end of my budget month, whereas the emergency fund gets the savings at the beginning of the month.

The Other Brian
The Other Brian
9 years ago

I keep my budget flexible by budgeting “worst case” every year: I don’t expect raises, I don’t expect bonuses; I always assume by worst month for groceries or gasoline will be my average this year, I always assume utilities and insurance will go up 5% this year and I CONSTANTLY feed by EF with leftover cash even though it is fully funded (8 months of cash with NO assumption I would get STD/LTD or unemployment benefits if I were unable to work). Lastly, I have 10% of my income directed to my “Irregular Spending” account: this is used for home… Read more »

Beth
Beth
9 years ago

I honesty don’t understand having so many various emergency type accounts – it seems like a hassle. I just have a miscellaneous line item in my budget, for such surprises – no special account. Over the course of a year, it all averages out.

Kim
Kim
9 years ago

We’ve had a “big-ticket item” account for years and it’s a must for us. It’s similar to the curveball account and pays for homeowner’s insurance, appliance replacement, property tax, trips to the dentist… This is in addition to our emergency fund which we would only tap in a real emergency such as unemployment. We also have a fun version of this labeled “travel”. It’s a great feeling to pay cash for a cruise! We keep all of these accounts topped off at all times. Another big advantage to this method is that we only need to do a budget for… Read more »

Nelson
Nelson
9 years ago

I am with Jonathan and believe it’s overkill. Why not create a $100 emergency fund, $1000 fund and $10000 fund. And just in case, maybe we should have a $500 fund–you just never know… Really?

margot
margot
9 years ago

The last thing I need is yet another account to worry about. My policy: have an emergency fund for real emergencies and say NO to everything else. None of the three examples that you listed would require me to have a “curveball” account. Extra food for house guests is a small expense that I would cover by cutting my grocery spending in other ways that month (using some coupons, substituting several really cheap meals for dinners, etc). If I couldn’t afford a tutor, I’d do it and I’d have family and friends help if needed. I don’t like math, but… Read more »

PigPennies
PigPennies
9 years ago

I love the idea of the curveball account! It’s so simple, I don’t know why I didn’t think to do this. I allocate a certain “miscellaneous” budget that covers everything from birthdays to Christmas to cat food to clothing to eating out once in awhile. I can’t just divide by 12 and spend that much every month, because by the time December rolls around I wouldn’t have enough for Christmas, but if I still deduct a fixed amount each month (my allotted miscellaneous minus actual expenses) and deposit the rest in my ING savings account, I’ll have a little extra… Read more »

chacha1
chacha1
9 years ago

I like Karen’s approach: “The slush fund one is funded by whatever is left in my checking account at the end of my budget month, whereas the emergency fund gets the savings at the beginning of the month.” That’s roughly what I do, too. Long-term savings (including retirement, EF, and HSA) come first. What constitutes a real emergency has been discussed here before … weddings, family visits, and even tutors aren’t emergencies. (It shouldn’t come as a surprise to a parent that their kid is struggling in school, and anyone on a restricted budget ought to make that crystal clear… Read more »

BrentABQ
BrentABQ
9 years ago

The only problem I see here is that the budget is too restrictive and so you have a pressure release valve. too many different accounts and categories stifles your ability to make a decent decision based on your values. If your Efund is 9 months of salary taking out a week’s salary and paying it back over the next couple months isn’t significantly adding to your risk.

bethh
bethh
9 years ago

I put money every paycheck into my bill-paying checking account, and could use that as a small curveball fund if I needed to. I always transfer about $50/month more than I actually have allotted to my bills. Right now my overage is about $100 but it slowly builds up over time.

Saundra Davis
Saundra Davis
9 years ago

I encourage people to create a save/spend account that contains funds to cover period and “known” expenses (car registration etc.)and a save/don’t spend account (yes they are separate) which serves as an emergency fund and is not intended to be used unless absolutely necessary. The key to any such program is the behavior that goes with the decision to set up an unplanned expenses account. Information alone is not sufficient to change behavior and when you help people link their values with their choices this type of model will be much more effective. I don’t believe that shaming and blaming… Read more »

Marsha
Marsha
9 years ago

If it’s a smallish amount, say under $200, I just try to cut it out of my current cash flow. I always have a full pantry and freezer, so I can avoid grocery shopping for a week or two if I have to. I hate taking unplanned money out of any of my accounts.

Jennifer Lissette
Jennifer Lissette
9 years ago

I’ve got one of these, but we call it the opportunity fund. The emergency fund is basically for one of two things: a job loss or totaling the car. The opportunity fund acts like an alternative to a credit card if we ever need money for a budget busting item.

We keep our “curveball” account funded at about $5000. I can’t tell you how many times it has helped us out.

Louise M
Louise M
9 years ago

My Emergency Fund is $1000 and I started it to cover my car insurance excess. Now, it acts more as a buffer for the little unexpected things. If I use it, I have to pay it back in full when I get paid. This account is with the same bank as my everyday transaction account so if I need the money, I can get it easily. I am working on a cushion of 6 months worth of expenses. This will be my real Emergency Fund and won’t be touched unless there’s a large emergency (touch wood). This account is with… Read more »

Amanda
Amanda
9 years ago

I think that people are confusing the term “account” with bank account, instead of bookkeeping “account”. I have separate bookkeeping accounts in my spreadsheet and QuickBooks (others might use Quicken, Money, mint.com, etc.) but only one bank account where all the money is stored. I really appreciate the level of the article. It seems targeted to those who have gotten out of debt but aren’t necessarily financially independent. I started a curveball account in January. Income in our home isn’t salaried. We’re budgeted for an amount we definitely will get. Every check there is extra. Prior to January we’d just… Read more »

Adrian
Adrian
9 years ago

As Always, An Excellent Idea, Gail. We Must Inevitably Learn To Live Life By The Phrase “To Expect The Unexpected” Especially In Regards To Our Personal Finances.

It Dismays Me, Though,That This Article Was Posted Much Later In the Day; We GRS Readers Are All Well Aquainted With the Fact That Much Attention Is Rarely Paid To Second-Day Articles, As This Is Not A Common Occurence At This Site. Infact, Posting This Article Solely Would Have Likely Made J.D.’s Preparations For South Africa Much Less Stressful.

Matt
Matt
9 years ago

“The unexpected is only unexpected if you don’t expect it.”

AC
AC
9 years ago

God forbid we not use credit cards when in a crunch and must pay cash for everything that comes along. I have no problem putting a small balance on my card and paying it off as quickly as possible.

El Nerdo
El Nerdo
9 years ago

“Curveball” scenarios + my replies Your brother and sister-in-law and their four kids came for a week. “Yo, bring some groceries for your tribe” or “Sorry, we can’t have you over this week. Maybe some other time.” Or when you least expect it, your best friend announces she’s getting married and you have to find a way to pay for a $200 dress. “Sorry mang, we can’t come cuz WE PO. Best wishes.” (Isn’t clothing supposed to be part of one’s regular budget anyway? Once we got invited to this charity ball and my wife got an awesome dress for… Read more »

Sara
Sara
9 years ago

I can see the point of a curveball account, but only if you’re a zero-sum budget person. I’m not. I am able to handle most “curveballs” and even most “emergencies (car repairs, etc)” out of my general cash flow. I know that I’m mostly able to do this because we have a fairly high income and low fixed expenses, and that it’s not everyone’s situation.

Mom of five
Mom of five
9 years ago

I don’t think having all the extra accounts is overkill. Our budget is not so tight anymore that we need to have an extra account for life’s little surprises. However, after stagnating in the savings department for the last few years, breaking apart our savings into smaller targeted accounts (an idea I got here) has really jump started us. Psychologically, it works for us. Here’s a list of what accounts we’ve got now: Emergency, car replacement, private school tuition, vacation, general unknown savings. Because there’s enough padding in our checking each month, I take what’s left over and distribute. Emergency… Read more »

Casey
Casey
9 years ago

I don’t think it has to be complicated. I have an emergency fund – something I don’t touch unless a true crisis arises. I’m actively putting money into this account until I hit my goal balance. I set up another account to automatically set aside money for bills that don’t come every month – for me that’s my car insurance premium which I pay every six months. I’m only using maybe 2/3 of the amount that goes in there annually, so in reality if I needed a couple hundred I could raid it without fear of not being able to… Read more »

lostAnnfound
lostAnnfound
9 years ago

I like El Nerdo’s reply for the kid failing math because I have one of those kids. It’s like this:
“Kid, you better hit the books, stay after school for extra help and study more because if you fail math, you’ll be going to summer school & you can kiss your vacation goodbye!”

CT
CT
9 years ago

Absolutely! But it’s not used when you can’t/won’t stick to your budget as some are suggesting. Ours is for the expenses that we usually have every year, but can’t predict exactly when it will happen. For example, new car brakes and tires, birthday and Christmas gifts, home repairs, doctor’s appointments and prescriptions, etc. We can budget how much we will spend in a period and then divide it monthly. That amount goes into the curveball fund to regulate the budget over the course of the year. I don’t have to say no to the present for the family member with… Read more »

Lara
Lara
9 years ago

Long-time reader, first-time commenter, prompted by all the “hate” at this post. I agree with Sara, that the curveball account works especially if you are working off a zero-based budget. But it seems like those who are taking issue with the idea of this separate slush fund, kind of already have it in place. Whether it’s a little extra padding in their budget, or the way they mentally spend and allocate money, it seems those who are categorizing this account as “overkill” already use this idea, just not as a real (three-dimensional) account. I say this because I technically have… Read more »

Rosa
Rosa
9 years ago

We do the worst-case budgeting too – and since the worst case rarely happens, there’s enough overage in the housekeeping account to handle these kinds of small “emergencies”. When we track our savings these expenses seem to even out over time – if we have a few months without unexpected guests or repairs or family events (forget the dress, how about the $100 wedding gift or the care package to South America for a sick sibling) then we’re likely to get hit with a biggie that wipes out the “extra” money.

PB
PB
9 years ago

We have a jar for spare change, like a lot of people. However, we also use it for irregular income, such as very tiny dividend checks, accidental overpayment refunds, odd job income, and kids (FINALLY!!) paying back in fits and starts money that they borrowed at various times. Since this money is off-budget, we use it to buy off-budget items. This past weekend we walked into the furniture story and bought a new box spring and mattress set. The clerk was astonished when I pulled cash out of my purse (yes, I used big bills — not mean enough to… Read more »

Mary
Mary
9 years ago

We just waaaay underbudget so when those unexpected things come up (as they always do)it’s not a big deal.

Austin
Austin
9 years ago

This is a good topic! My wife and I are very blessed to be able to budget for everything we foresee needing during the month and leave a couple (if not more) hundred dollars left over. Hopefully this cushions, if not covers, anything unexpected (like a recent tire replacement). Now, if it doesn’t cover something unexpected that’s more tricky. I typically consider two options: 1) Over the years, I have built up a cushion (maybe even too much of one) in my checking account. Recently and before a big transfer to my savings account, this was on the order of… Read more »

Austin
Austin
9 years ago

This is a good topic! My wife and I are very blessed to be able to budget for everything we foresee needing during the month and leave a couple (if not more) hundred dollars left over. Hopefully this cushions, if not covers, anything unexpected (like a recent tire replacement). Now, if it doesn’t cover something unexpected that’s more tricky. I typically consider two options: 1) Over the years, I have built up a cushion (maybe even too much of one) in my checking account. Recently and before a big transfer to my savings account, this was on the order of… Read more »

Sandy
Sandy
9 years ago

Shopping through cash back portals like Ebates, ShopAtHome, AAfter Search and FatWallet is a great option for saving while spending. So, whatever you buy you can always go for any of the cash back sites to save while spending.

Lisa
Lisa
9 years ago

While I don’t have a separate account as in a savings/checking account with it’s own number, I do something similar, and caught a couple echoes of this in other answers: I underbudget for income. I know almost to the penny what I will make as my monthly salary doesn’t vary, and I underbudget for that by about $60 each month. I go with worst-case scenario on my husband’s hourly wage, that for that week, he won’t make any overtime. Then I undercut that worst-case about $50 per check. Any overage after all the twice-a-month budget items are reserved out of… Read more »

Steve in W MA
Steve in W MA
9 years ago

I have a “blow $$” category in my budget, which is for things in my life that are fun and not absolutely essential. All of my usual fun stuff, such as booze, nights out, and whatever, come out of that. And any social events with friends. AND any oddball purchases that aren’t absolute necessities.

Once it gets to zero, that’s it. No matter what. People who are really my friends can come over to my house or invite me to theirs. Really.

Lucy MacEachern
Lucy MacEachern
9 years ago

I do not have it in a separte account, but each payday, after allowances are distributed, I put an extra “allowance” aside in a separate place, calling it “Backup money”. I use it for an extra dinner out with friends, an unexpected birthday, or other unexpected expense. If it goes for several weeks or months (sometimes) there is enough for a weekend away for my husband and myself.

J.D. Pohlman
J.D. Pohlman
9 years ago

I actually do exactly this. I have a category in my budget called “buffer” that is my slush fund. When we overspend, I take it out of that category. I know that we always overspend in some areas (such as groceries), so I tend to put less than what we usually spend in those. My idea is to try to trick us into spending less in groceries, because we have less in that budget category. But if we do go over, I just take it from the buffer category. It works great for us, and it makes things a lot… Read more »

A-L
A-L
8 years ago

I like the general principle of this article. Like someone posted earlier, this doesn’t have to be a separate “account”, but for people who budget, it’s a separate category. Though I don’t think the examples provided were great “curveballs” for the GRS crowd, I think there are several times when it would be needed. Examples include: 1) A big storm hits your town and you need to pay the $2500 deductible on your home insurance. 2) You get in a wreck and need to pay the $500 deductible on your car insurance. 3) You start experiencing dental pain and need… Read more »

Just Me
Just Me
6 years ago

Too bad no more posts have been added; it has been almost two years. I have been using a spending plan for five years now. The term spending plan has a a different connotation; for me, it is more positive than a budget. I have often found myself having to move money around in different categories and give myself permission to do this. I also have separate savings accounts for some categories. I have it set up so that a certain amount comes out of my chequing account bi-weekly when I get paid. It makes it easier when I need… Read more »

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