It’s easy to get caught up in the excitement of creating a budget that looks perfect on paper, but reality often has a way of throwing unexpected expenses our way. Whether it’s a sudden car repair, an unplanned dinner out, or a forgotten subscription renewal, overspending happens, and it can make us feel like we’ve completely derailed our financial plan.
The thought of sitting down and reworking everything can feel overwhelming, and many people simply choose to ignore it, letting the problem snowball. But the solution isn’t to abandon your budget—it’s to build flexibility into it. A genuinely effective budget allows room for the unexpected while keeping you on track toward your financial goals.
But what’s the solution? Let me introduce you to the concept of constraint budgeting.
What is Constraint Budgeting
Simply put, constraint budgeting involves stricken parameters in order to have more flexibility later.
Typically, you make a budget to the tee and account for every dollar you can think of. Everything is perfect. Nobody move! Which, of course, is not possible. It’s all pristine until your gas ends up being $30 instead of $20 because you needed to drive outside your regular pattern, and now the entire house of cards has fallen.
Don’t get me wrong; budgeting so precisely is significantly better than not having a budget. And it will always put you down the correct path as long as you keep working at it. However, that methodology is missing one key ingredient: real life.
The Benefits and Drawbacks of Constraint Budgeting
Constraint budgeting will not be the easiest thing you can do—I’ll get that out of the way now. But there’s a tradeoff—you put the work in upfront, and you’ll be rewarded with peace of mind when your plan is all but bulletproof.
Whereas when you make a speedy plan, you have to keep coming back to revise it. This method is somewhat alleviated with zero-based budgeting, but like zero-based budgeting, it does not address the future.
Additionally, constraint budgeting is the basis of forecasting. Guessing what the future will look like for you is cool, but what if you could actually predict it? Most of the time, our finances aren’t as complicated as they seem and often just require a little more thought and effort.
Many of the resources out there will put you in a direction and teach you to focus on this check and bill that’s today. But projecting out isn’t as hard as they may lead you to believe. In fact, it just gets easier the further you go out.
The bottom line is that increasing your constraints and then ” figuring out” a plan that uses those constraints can help you go about your days more confidently.
How To Go About Constraint Budgeting
The concept of constraint budgeting follows a few basic principles of budgeting but expands on them. For instance, it is imperative that you underestimate your income and overestimate your bills if you don’t have 100% certainty of an amount.
If you have two jobs and you know one is salary and is $1,500 biweekly and your second job is a side gig that’s between $300-$400 a week, you should definitely use $1,500 biweekly and $300 or less a week in your budget.
If your phone bill is always $72.39 and your electricity bill is $100-$125 a month, I would use $72.39 for your phone bill and $125 or higher for your electricity bill.
Next, you need to establish your timeline. In many cases, accelerated debt payoff is the timeline. In the past, I’ve made the length of a potential lease my timeline. I’ve helped people line up a certain amount of debt payoff with their goal to begin house hunting at a certain time. The point is you bring your real life into the budget, and you build and optimize the best possible outcome for that date.
When Should You Constraint Budget?
Always!
There is such a thing as constraining too much, but you will eventually learn what’s right for your budget and situation.
I was in mountains of debt myself, and when you make that breakthrough to the end of the timeline, it is like a weight off your shoulders. You don’t have to worry about your finances as much. And I thank constraint budgeting to this day for getting me through it.
