Identifying Holes in Your Existing Budget

Posted on Monday 21 June 2021


Holes in your budget

Whether you are a budgeting newbie or a savings pro, creating and maintaining a budget comes with its own set of challenges. One such challenge is a budget hole – but what does having a hole in your existing budget even mean?

Having a hole in your budget is really about a lack of transparency. It means that you have money that seems to be disappearing, and you aren’t quite sure where it’s disappearing from – or even why it’s happening.


For example, maybe your monthly budget allocates $200 for eating at restaurants or getting takeout, but somehow you’ve only got $150 to spend. If you can’t figure out where that missing $50 went, that means you’ve got a budget hole.


Identifying – and patching – a hole in your budget as soon as possible will help you keep your monthly spending and saving on track. If you’re worried that your budget might not be air-tight, don’t panic: even the most solid of budgets can develop a hole! See below for key questions to ask yourself as you rethink your budget.

How much am I spending on credit cards?

Credit cards are a double-edged sword; you can’t have a good credit score without using credit cards, but getting caught in credit card debt can send your budget on a death spiral. If you aren’t paying your balance off at the end of each statement cycle, you’re racking up interest fees.

Take a look at your budget and see where your credit card spending falls in. Are you spending more on credit than you can afford to pay off each month? How much are you getting charged in interest or late payment fees? The holes in your budget could be due to the way you are using your credit cards.

How does my budget compare to average pricing and rates?

Whether it’s due to inflation, fluctuation in demand, or good old-fashioned capitalism, the price of a good or service today is not guaranteed to have the same price next year, or even next month. And because prices and rates will change over time, your budget allocations should change, too.

If you haven’t reviewed your budget spending by category in the past few months, this is a great opportunity to re-evaluate and look for a budget hole. Spend some time reviewing your average spending for each category to see if you may be losing budget space due to higher costs.

For example, it could be that you’ve allocated $200 a week for groceries, but within the past month, you’ve noticed that the average cost of meat has almost doubled. Or, perhaps you originally built your budget assuming that you’d be able to take advantage of sales and coupons, but haven’t been able to utilize either.

Depending on what you find, patching the hole in your budget could be as simple as adjusting your spending limit for individual categories. Be cautious about taking this step, however; raising your spending limits isn’t an easy fix.

You might be able to solve one problem by increasing your spending amount at the grocery store, but you’ll need to create a plan to decrease your budget elsewhere. Otherwise, you’ll end up dipping into your savings budget – and that should only be done as a last resort.

How closely is my budget aligned with my goals?

Every budget is unique, because everyone has their own goals, commitments, and lifestyle. And while one person may experience a great deal of anxiety and worry over their personal finances, those emotions and thoughts aren’t always shared by all. To be successful, your budget should be closely aligned with your goals and your lifestyle.

A hole in your budget could be due to a change in goals that hasn’t been reflected in your budget. For example, maybe your initial goal was to save money for a downpayment on a new home, but recent market fluctuations have put that goal on the backburner.

If you haven’t accounted for that change in your budget, you could be overspending without realizing it. Worst part, it could be all related to some deep money related trauma that you might have picked up in your childhood. Either way, it will kick in sooner or later so make sure you are as aware as you can be.

Of course, goals are rarely etched in stone, and can often fluctuate depending on changing life circumstances. Stay flexible and continually evaluate your budget to ensure that you are still supporting your primary goals.

Did you give enough room for fun?

“Fun” and “budgets” don’t often fall in the same sentence – but setting aside money for entertainment and relaxation will help keep your budget on track! Everyone needs to have fun, and creating a budget for going out with friends, seeing a movie, or a quick trip away is important. In fact, the sooner the better as it seems like we all might be going back to the office after Covid-19.

Think of it this way: if you don’t build space in your budget for fun activities and entertainment, you’ll eventually start to feel deprived and stressed – and that’s exactly what leads to spontaneous purchases and overspending. Spontaneous purchases and overspending both lead to budget holes, which can throw your entire budgeting system out of whack.

If your budget is tight, set aside a small amount of money each week for entertainment (maybe $20 or so). Even a small allowance can work wonders: although you might need to sacrifice a big weekend away with your friends, having an entertainment and “fun” budget can stop you from spending all of your cash on a whim.

Budgets should be flexible enough to adjust to changes in your financial situation, but that flexibility doesn’t mean that you can just set a budget and forget it. Accidental holes can pop up at any time – and if you aren’t able to pinpoint the cause right away, you could be leaking money!

Take the time to get up close and personal with your budget and learn how to pinpoint a budget hole as soon as possible. Not only will you have a better view into your finances, but the actual budgeting process will become much smoother – and that’s something that any budgeter can get behind!