How To Bounce Back After An Unplanned Splurge

By Adhil Shetty | September 22, 2017

How To Bounce Back After An Unplanned Splurge

Everyone indulges in unplanned spending every once in a while. If you have just crossed your budget while shopping for the upcoming festivals, don’t fret over it. You won’t be the only one struggling with a lengthy Credit Card bill at the end of the month. The tempting discounts and festive offers have taken a hit on many pockets. However, this overspending would require some damage control to help you stay on track with your finances. Your loan EMIs and utility bills cannot go unpaid. Here are a few things you can do to bounce back from an unplanned splurge.

Do Not Panic

Start with admitting to yourself that you have gone overboard with your shopping expenses instead of running away from it or panicking over it. This would help you stay calm and think clearly through the situation. Panicking would only lead you into making more mistakes. So, look at the bills and figure out the damage they have caused to your monthly budget.

Redraw Your Budget plan  

After the splurge, the first thing that you must do to get some immediate relief is redrawing your short- and medium-term budget. You can either remove some items from your budget altogether or cut back on spending on some items. For example, your extra cable channels or gym membership could be done away with until you recover the lost amount. You can also try selling some unnecessary things in the house to cover up for the loss. You must set a target for the amount you wish to recover each month. This would help you figure out how much to cut back on from your monthly budget. By making these small changes in your budget and by sticking to it, you can recover from the unplanned expense in a short while.

Take Care Of Your EMIs

At a time when you are pressed for money, you must be struggling with what to prioritise and what to leave out. Well, your loan EMIs cannot be left behind for sure. You have to make necessary cuts in your budget to make space for your EMIs. This could mean cutting down on the weekend parties or going to office by public transport instead of your own car.  If you let your unplanned splurges take a toll on your debt repayment plan, it could impact your Credit Score after a point, thus degrading your future borrowing capacity. If you cannot manage to pull up the required amount by cutting back on other expenses, you can borrow from your friends or relatives for a short while to service the loan repayment. However, make sure you have a repayment plan in place.

Don’t Touch The Contingency Fund Unless Necessary

A contingency fund is meant for deep financial troubles and should not be touched upon for little inconveniences. It should not be anything more than your last resort during a financial crisis. If your situation is severe and you are forced to withdraw a part of your emergency fund, make sure you replenish the contingency fund once your financial position bounces back to normal.

Learn From Your Mistakes

The most important thing is that you learn from your mistakes and plan better for next time. Analyse the venues which led to the splurge resulting in financial pressure and work towards fixing them. Start saving up for it well ahead of time. You can also set a limit on your Credit Card before you go shopping to avoid unplanned splurge.

Planned expenses don’t just save you from surprise bills but also help you save bucks as you can plan to shop at a time and from stores wherein you can avail discounts, offers, and cashbacks.

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About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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