In medieval times it actually happened pretty frequently. Kings and queens would spend huge sums of money building grandiose palaces , throwing parties and fighting wars. By the time they were done many of them were dead broke. This wasn't typically a problem though, since monarchs had absolute power in their kingdoms. They would just raise taxes or execute a few wealthy people and seize all their assets.
But what about in the modern era? Today most monarchs are not spending any money fighting wars nor are they building multi-million dollar palaces. Still, somehow it has emerged that the Queen of England's household finances are at a "historic low". There are apparently only 1 million Euros left in her reserves. This probably sounds like a sum you woudn't mind owning. But the Queen has expenses not quite like that of the average English citizen. In her palace alone the boilers contribute a cost of 774,000 Euros a year!
The Queen's staff is forced to deal with the budgetary shortfall in a variety of ways. Bickingaham Palace and Windsor Castle-the Queens official residences- are old and have fallen into such a state of disrepair that rainwater leaks inside. Staff are forced to catch the water in buckets so that the paintings and other ancient valuables adorning the palace won't be damaged.
The current state of the Queen's finances is quite a decline from 2001, when she had 35 million Euros in reserve. Much of the precipitious decline is blamed on the Royal courtiers who have failed to control her spending. Members of Parliament urged them to "get a grip" and advised them to take money-saving tips from the Treasury.
As the Queen is slowly beginning to retire from public life and is handing the reigns of the government over to her son Prince Charles, it may be possible for her to start getting her finances in order. Prince Charles,who is the heir to the throne, is to accompany his mother on a foreign trip to the beaches of Normandy on the 70th anniversary of D-Day. There is speculation that this may be the Queen's last official foreign visit, as she turns 88 years old this April. Palace sources state that the monarch's schedule contains no future foreign trips.
Stopping foreign travel should save the royal coffers quite a bit as each foreign trip taken costs hundreds of thousands of Euros. Still it is highly unlikely that the royal family will be curbing their expenditures too much anytime soon. As long as the English taxpayers are willing to foot the bill they seem perfectly content to enjoy their standard of living.