Every year you make a resolution to get your finances in order. You’ve read every book, checked out a few personal finance blogs, and maybe even completed a few courses. After tracking your expenses, you lay out your budget on an excel spreadsheet. You follow the budget for a while, but after a month or two you find yourself falling off track. What is it about budgeting that’s so challenging? You’ve got the gist of what you’re supposed to do, but no matter how hard you try, you end up right back where you started….broke and in debt.
Learning New Routines is a Challenge
The truth is, learning anything new can present a challenge – especially when you’re used to doing something a certain way. For years you’ve spent your money as you please, but now that you want to discipline yourself, you feel trapped and resort to what feels comfortable. The only problem is that you end up ruining your credit and your personal financial status. Identifying your challenges and finding efficient solutions is often the best course of action.
Identify Your Budget Shortcomings
Everyone has a weakness when it comes to budgeting and managing finances effectively. Bringing those shortcomings to the forefront can help you to make a plan of action that will actually be more effective than your previous attempts. Some of the most common reasons that personal budgets fail to begin with include:
· Your budget is too restrictive – Budgeting certainly requires discipline, but being too strict on yourself in the beginning can cause you to stop budgeting altogether.
· You fail to adjust your budget as your financial circumstances change – As new expenses arise they need to be entered into the budget. Often people don’t reassess their budget. As a result, they end up going over budget each month.
· You didn’t prepare for the unexpected – Life is full of surprises. Many of us don’t take the time to prepare for those instances and as such end up going over budget. We talked with Natalie Cooper of BankingSense who suggested “opening a savings account and adding some money to it for insurance against unexpected expenses. That way you’re not pulling from your budget to accommodate those needs.”
· Your household is not all on the same page – Another common problem with budgeting is being on the same page with your entire household. If you are sticking to the budget, but your spouse is still mismanaging their money, this could throw a monkey wrench in your attempt to become financially stable.
So What’s the Solution?
Now that you’ve identified your budget shortcomings you can begin to find tools and resources to help you stay on track. There are plenty of ideas that you could consider as a solution, but here are a few recommendations.
· Pace Yourself – If your issue with budgeting is that it’s too restrictive, you may need to pace yourself a bit more. For example, if you normally eat out every day for lunch, cutting back to save money is a great idea. However, completely eliminating your lunch budget and trying to bring your lunch every day might be a bit restrictive. Instead, you should give yourself one day per week that you can eat out. This still saves money but doesn’t make you feel “broke” or “trapped” by your budget.
· Periodic Budget Reviews – If your problem was failing to update your budget with financial changes then you need to have periodic reviews. In your first year of budgeting, try to evaluate your budget at least once every two months to include any changes.
· Create an Emergency Savings – As stated above, not preparing for emergencies or unexpected events can really set your budget back. The ideal solution is to create an emergency savings account. Even if you’re on a tight budget, adding $5 a week to an account can add up over time and keep you from dipping into money that was expensed for something else.
· Gather Support – Your family is your biggest group of supporters. When you’re ready to set your budget, have a family meeting to assure that you’re all on the same page. When everyone is aware of what the overall goal is, they’re more willing to pitch in and do the right thing.
Hopefully this gives you some insight (and relief) on budgeting. When you’re trying something new, it can be very challenging to work out all the kinks and stay on task. However, by clearly identifying your shortcomings and effectively researching ways to remedy them, you will find that budgeting is not as bad as it seems.
Joe @StackingBenjamins says
I think support is a huge part of success with your goals. I never ran a marathon until I was around marathoners….and now I’ve run 10!
Laurie @thefrugalfarmer says
Happy New Year, Pauline!!!!! Great tips all the way around, but I think the periodic budget reviews are SO important. Things change, so often our budget has to change too.
John McKinney says
Part of my problem is that my income can be irregular, so making a steady budget based off of how much money I would be bringing in was always difficult. I switched to YNAB which made things a little easier. What also helped was making my lifestyle more consistent and tracking what I was actually spending my money on.
Jayson @ Monster Piggy Bank says
Pauline, Happy New Year! I agree with you. Budgeting requires discipline. Without it, I doubt if a person can be successful in it. Sometimes, it also requires some motivation. Cheers to a more fruitful year!
Keeping the budget can be difficult and extremely stressful. I’ve found myself straying away from the budget every now and then. This 2015, I’m trying to avoid that fate by including a “fun money” in my budget. It’s a little something for me to enjoy and not feel too restricted by having a budget. Thanks for the tips! Will definitely use them this year.