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For anyone trying to improve their financial status, a budget is the first place to start.
And while many of us think we know how to budget, repeatedly going over our spending limits proves otherwise.
When I first started budgeting years ago, I didn’t know the first thing about what a budget really meant. I just thought I was stopping my spending and getting myself on track.
After years of failing with my own budget and finally learning and mastering my perfect budget, I wanted to share with you what I learned.
This will come in handy for newbies who are creating a budget for the first time. But, it will also be a great check in for those of you that have been struggling with your budget.
7 Reasons why your budget is failing
1- You Don’t Have a “Why” in Mind
Without a reason for budgeting your money and managing your finances, it’s hard to stay on track.
Have your “Why” in mind makes a huge impact on your motivation and drive to succeed with your budget.
Your “why” could be a new house, a family vacation, financial freedom, debt freedom, etc. whatever it is, keeping your “why” in mind will keep you focused and on track.
2-Creating a typical budget
Your life is not typical, so your budget shouldn’t be either. Our lives our very personal and our budget should be tailored to our unique lifestyle.
Having a budget that you try to fit to your life will only feel restricting.
Your budget is your personal game plan to accomplish your life goals. It’s a list of your personal priorities broken down into dollars and cents.
It’s important that your budget have the categories that you personally need and use often.
So, create your money plan with your personal goals in mind.
If you’re having trouble with your budget, grab the budget cheat sheet to get started the right way.
It’s absolutely free and you’ll be able to create your perfect budget and learn the strategies to stick to it so you can start seeing your savings grow.
3- You forget to add savings
We’ve all been there. We get paid with the best intentions that we’ll save this month. Then, the month passes by and mysteriously there isn’t any money left to save. Every month the cycle continues.
There’s a better way.
Add Savings as the first category in your expenses.
When you save first, there is no excuse to spend that money. You’re slowly building up the habit of saving and you’ll start to recondition your mindset that savings is a natural part of your routine.
Even if you save $10-$25 each month, building that habit will make a big impact on your success. And a small amount adds to over time.
4- You forget to check in
Creating a budget is the first step, but if you don’t check in regularly and make sure you’re on track, chances are you’re spending more than you think.
Keeping track of your spending and checking in consistently is key to being successful.
As a new budgeter, I made this mistake several times and it always resulted with me going over my spending limits.
Checking in consistently helps keep you accountable and you’ll be aware when you need to scale back on your spending.
5- Being too perfect
Perfectionism has no place in a healthy budget.
You’ll have days where everything goes as planned and other days where everything goes wrong.
Your budget has to be flexible. Otherwise, just like with a diet, you’re prone to binge spending on items your restricting yourself from.
It’s better to give yourself some flexibility and breathing room to spend a little on things that make you happy.
That coffee or a manicure won’t break your budget if it’s already included in your plan.
The important thing to note here is to add everything (big and small) to your budget so you know exactly where your money is going and you are essentially approving all of the expenses.
6- You never get to zero
If you are not implementing a zero based budget, it’s easy to waste money on things you weren’t expecting in your month.
A zero based budget eliminates wasteful spending because every single dollar is assigned a certain task in your budget.
Even the smallest of expenses, like a coffee or a vending machine snack, should be accounted for (as we mentioned in #5).
But equally important, is accounting for all money that comes into your account. Tell that last $20 where it should go, so you don’t end up losing it to an impulse buy later in the month.
7- Not Planning Ahead
People often think of a budget as a list of bills and debt payments to keep track of. It’s so so much more than that.
It’s basically a plan that helps you organize all of your month’s expenses, including the fun expenses like a birthday party, wedding, or vacation.
If you want to enjoy those events, you need to include them in your spending plan.
When you set aside money for the things you want in life, you’ll enjoy them more and look forward to them.
It relieves your stress of not knowing how to pay for those “fun” events when you know that you’ve planned ahead to account for them.
Planning ahead is key to keeping your finances in order. Knowing what is coming up will help you plan your month better and make the necessary adjustments to your month.
Avoiding the pitfalls of budgeting is possible if you have the right mindset and system in place.
If you’re struggling to manage your money and want to budget better, join the Budget Workshop and watch how much you thrive with your money.