This is Ted. He ruined our grocery budget.

I was reviewing our family spending over the last couple of months, and I noticed that our grocery budget is significantly higher than it was this time last year. I racked my brain to see what had changed. Sure, we had a new child, Ted, but there’s no way a baby could have that sort of impact on a grocery budget, especially since the formula days had passed. I was wrong. Ted is an eating machine. He eats extremely healthy food, but he eats a lot of it. It was time to make some budget changes.

Budget fluctuations can really sneak up on you, and put a major dent in your financial progress if they are ignored. I’ve seen couples ignore increased grocery spending, rising fuel costs, and increasing mortgage payments. This is bad. You shouldn’t assume that your “excess” income can absorb/handle the swelling expenses. This is inefficient. There are technically three options to consider when your expenses increase, and as you will see, one of the options is a terrible option.

1. Cut spending in other categories- Your income is finite. Your income isn’t necessarily going to rise just because your expense are rising. Let’s break this down to the simplest level. If your income was $5, and you spend $2/month on groceries, and $3/month on clothing costs, and your grocery spending increases to $2.50/month, then you must change your monthly clothing spending to $2.50/month. In my opinion, this is why monthly budget awareness is so important. If you see trends that indicate certain category spending has increased, then you must reduce spending in other categories so your trend doesn’t have long-lasting financial damage.

2. Reduce the amount of money you are saving- This is assuming you are saving (accumulating) money on a monthly basis. You should always budget your savings, not just save what’s leftover at the end of any given month. If your method of saving has always been the “save what’s leftover” method, then stop doing that. It’s silly. SPEND what’s leftover, not save what’s leftover. Save first. You will save a ton more money if you actually budget it.

3. Go into debt- Like I said, this isn’t really an option. But if you don’t adjust your spending or saving, then you are most likely going into debt. You wouldn’t believe the number of people I see go into debt without even realizing it. This starts when certain expenses creep up on you.

Ted will eventually eat more. And our grocery budget will continue to grow. Mrs. Planner and I must make a wise choice when we decide which way we should handle this spending increase. And you must make a wise choice anytime your spending starts to rise.

Pete the Planner®

Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.