Why Your Budget Doesn’t Work
There’s a reason why people don’t like to budget or even think about money. That’s because it’s hard work making a spending plan that is reasonable and that you can stick to in your daily life. We’re willing to wager that most people who make a budget plan to stick with it but fail for a handful of reasons.
The Problem:
It’s Unrealistic– Many people write out the budget they think they should have but set unrealistic expectations for themselves by not budgeting fairly for every expense. Be honest. If you spend $10 on lunch every workday, that’s $50 a week. Don’t budget $25 thinking it will force you to change your patterns. It will not.
The Fix– Plan for all of your expenses. That includes your weekend entertainment, school clothes for the kids, birthday gifts and whatever guilty pleasure that makes your life happy. Ignoring these expenses won’t make them go away but you will be unprepared when they pop up. Also, with the cost of everything on the rise, budget a little high to make sure you have enough.
The Problem:
You’re Not Really Committed – A budget is meant to be your spending plan. Unfortunately, it you’re not committed to actually following through with that plan, it will fail. It’s up to you to put that plan to work by monitoring your spending within each category. You can either adjust your spending or adjust your budget to accommodate your spending. If you make a budget but never open it, you’re not really committed. If family members aren’t aware of the budget or ignore it, their lack of commitment will be a hurdle as well.
The Fix– Factor the budget into your daily life. Every time you want to spend money, ask yourself if it’s in the budget. Check in on the budget every day or every couple of days to make sure you’re on track. Better yet, check in every time you spend money by logging every dollar and dime as you spend it. Talk to your spouse and use it as a teachable moment to help your kids understand how money and spending work when you are running a household.
The Problem:
Poor Budgeting Method – There are numerous methods you can employ to build your budget. Some like pen and paper. Lots of people like to enter the data into spreadsheets and even more seem to appreciate websites and phone apps that can automate the process. If you carry your budget around with you on your phone, it’s easier to track expenses and to remain conscious of how much money you have at your disposal. But if you choose an app when you’re really into something old school, it is harder to be enthusiastic.
The Fix – Don’t be afraid to experiment or to combine methods. A paper budget can be kept in a visible area where you will see it every day but you may benefit from tracking expenses in an app on your phone. Don’t give up! Experiment until you find the right method for your lifestyle.
The Problem:
You’re Short On Money – You can write down anything you like but, if you’re short on funds, it is hard to make a budget where you’re robbing Peter to pay Paul. Remember, your budget is about money in and money planned to go out.
The Fix – The solution may not be easy but you need to either lower expenses or increase your income. That could mean refinancing your home, selling a vehicle or buckling down to pay off old debt. It could mean finding a higher income job, taking on a side hustle or selling some things to help you get caught up. If you are accumulating credit card debt because of extravagant purchases or vacations you cannot afford, it’s time to stop those bad spending habits cold turkey. In other words, your budget problems may not be about money so much as changing habits. Most likely, you will need to employ a few strategies to make ends meet.
Do you recognize any of these problems? How will you take control of your finances to build a budget that works for you?