Striking a Balance Between Over-Spending and Over-Budgeting

June 15, 2022 by Jenny Smedra

Growing up in my family gave me a unique outlook on personal savings habits since my parents had very different ideas about managing money. While my mom was a classic overspender who flirted with the monthly budget, my dad had a severe fear of spending money. Therefore, my parents exposed me to both ends of the spending spectrum. Now as an adult, I find myself constantly trying to strike the balance between over-budgeting and over-spending.

What’s the Difference Between Over-Spending and Over-Budgeting?

In my dictionary of personal finance, these terms represent two opposite extremes on the spending spectrum.


Over-spending seems self-explanatory, but there are subtler nuances to consider. In simple terms, it means that you are spending more than you bring in. However, the reasons behind the behavior may differ. Sometimes people blow their budget due to poor financial habits or to fill an emotional void. Other times, it happens when necessary services and living expenses increase in price. In some situations such as ours, people don’t even realize that they are spending more than they should.


On the other hand, over-budgeting is the opposite extreme in which you do everything you can to save money. My dad taught me the importance of looking for deals and discounts. However, his need to save money overshadowed everything else. He would spend weeks comparison shopping, and saving a few bucks became the primary focus. In some instances, his need to save money interfered with daily life and affected those around him.

How Do You Know Where You Fall?

Since there isn’t an official test, it can be hard to gauge where you fall between these two extremes. If you want to know where you fall on the spending spectrum, you need to take an honest assessment of your spending habits or ask your financial advisors. However, if you demonstrate any of these signs, it may indicate that it is time to find a better balance between over-spending and over-budgeting.

5 Signs You Are Over-Spending

1. You’re spending more than you save.

Building your savings is an important step towards financial freedom. However, if you save less than 5% of your monthly income, it’s a good sign that you are over-spending. At the very least, you need to maintain an emergency fund. However, if you find yourself buying more things instead of contributing to your retirement accounts, you could end up deep in debt and without a safety net.

2. You rationalize purchases that you know you can’t afford.

Another sign that it’s time to reign in your spending is when you rationalize purchases your shouldn’t be making. It’s okay to reward yourself when you’ve worked hard. However, treating yourself on a regular basis will undermine your savings goals. It’s easy to convince yourself that you deserve to splurge or that you can earn the money back in other ways. But, be careful not to confuse wants vs. needs. Lying to yourself and others about your spending habits is a huge red flag about your money management skills.

3. You rely on your credit cards to cover your expenses.

Many of us have used credit cards to pay our bills. But if you rely on them to make ends meet, it’s time to look at your spending habits. Although you may not be going into debt, your balances never decrease. With the high interest rates, it’s hard to save anything.

4. It’s difficult to tell yourself no.

Many over-spenders can’t adhere to a budget simply because they have no self-control. They find it hard to deny themselves things since their immediate wants take precedence over long-term needs. Some buy things to cope with negative feelings while others make weak excuses for buying unnecessary items. Whatever the reason, a lack of self-discipline will keep you from your financial goals.

5. Purchases above $100 seem insignificant.

While $100 doesn’t seem like much, it can make a huge difference to someone on a limited budget. But if spending $100 seems trivial despite the financial strain, you may have a problem. If you regularly make large purchases, you may be desensitizing yourself and ignoring the negative impact it will have later on.

5 Signs You Are Over-Budgeting

1. You are unwilling to spend money on things you need.

If you deny yourself basic necessities for the sake of saving money, then there is a good chance that you are over-budgeting. There are few financial benefits to using things well beyond their intended timeline. And, you waste a ton of time and effort if you are constantly repairing things instead of replacing them. However, extreme over-budgeters are unwilling to spend money even for things they need.

2. You avoid spending money on things you enjoy.

Another sign that your budgeting habits are disproportionate is when you no longer spend money on things you enjoy. Sure, there are times you may need to cut back your entertainment expenses. But if you miss out on social gatherings because of the associated costs or the need to save, it could indicate a bigger problem. Left unchecked, your financial habits will impact your relationships.

3. You are hyper-aware of how much you spend.

It’s one thing to monitor your finances, but it is an entirely different thing to account for every cent. If you constantly track your spending and tally things to the last penny, it may be time to take a step back and rebalance your priorities.

4. You are obsessed with saving money.

It’s wise to save your money and look for the best deals. However, there comes a point when frugalness crosses the line into obsession. Whether you can’t stop talking about it, checking your account balances, or thinking of ways to save more, obsession with money can take over your life. While necessary to sustain yourself, there is more to living than money.

5. The thought of spending money is physically painful.

For those who have difficulty spending money, large purchases can take a physical and mental toll. Sometimes it can even induce a panic or anxiety attack. Other people get nauseous or experience other forms of physical pain. Experiencing physical symptoms like these is one of the primary indications that someone suffers from chrometophobia, and that you may need to seek professional help.

How Can You Strike a Balance Between Over-Spending and Over-Budgeting?

I am constantly struggling to find the balance between over-spending and over-budgeting. At times, it feels like a circus balancing act. So, I look at both examples I had growing up and try to incorporate valuable lessons they each taught me.

My father stressed important lessons about personal finance that have helped me plan for a more secure future. Because of the emphasis he put on saving money, I have a healthy retirement fund and a squirrel fund for emergencies. He also showed me how to live on a budget to ensure I can afford my lifestyle.

However, there is also something to be said about including your happiness in your financial plans. While it may be irresponsible in lean times, my mom knows how to enjoy life. And, she isn’t afraid to spend money to do it. While some of her adventures have been expensive, she doesn’t delay joy. And with a little planning, it is still possible to try new things and structure it into your budget.

Therefore, a balance must be struck between the two extremes. While financial goals should be a high priority, they shouldn’t be the only ones. Not only do small rewards bring greater satisfaction in life, but they can actually motivate you to keep striving higher. If you never treat yourself to anything, achieving your goals may turn bittersweet when you realize what you’ve missed out on.

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