I think it is Eleanor Burns who gives a 1/8" fudge factor.
If the block is BIGGER, then it is easy (and important) to square it to the correct size.
If the block is too small, I would check two things: seam allowance and pressing.
Often, a block that is too small can be blocked. That means spray starch the block and tug it to the correct size. Pin it in place and press. When the block is completely dry, it will retain its shape.
And yes, you can fudge in your seam allowance when you put the blocks together. Just have fun with it. Give yourself permission to not be "perfect" and promise yourself to be more accurate with the next one.