I have always worked with a budget for personal spending and savings goals, but up until now my budgets never really worked for me. It was always something that I did, begrudgingly, out of need. I was fully aware of the purpose and need for sticking to a budget, but it was (and sometimes still is) a constant battle.
It was always easy to find reasons why my budget didn’t work. I would make excuses about unexpected car repairs or medical bills. I would make a lot of exceptions prefaced with…’just this one time’…and I would generally conform to the attitude that it wasn’t my fault because I just ‘didn’t make enough money’.
No. 1 – Your Budget Doesn’t Work Because You Use the Wrong Method
For the first decade of my adult life, I fought with a budget that wasn’t really working for me. And, yes, I tried every method that I came across, including Dave Ramsey’s envelope system. Despite the attempts that I was making at planning out my expenses and allocating appropriate funds…I was still perpetually strapped for cash when it came time to pay those bigger bills.
The problem: I was creating a monthly budget (because this is how most bills are paid) and trying to use it with a biweekly pay schedule.
This year, I decided it was time for a change. I decided that I was going to try shortening the intervals of my budgeting so that when I tripped up and blew my budget, I could recover more quickly. I still do a monthly budget to match the due dates on bills, but I also do a weekly budget that directs how much is allocated each week to each category.
This works for us because I feel like no matter how hard you try, something unexpected will always come up. When you go over your budget one week, you can immediately make (temporary) cuts in flexible areas the very next week to get back on track. Instead of taking a whole extra month to feel really poor while you struggle to make up for the difference in your budget, you can recover from these expenses more quickly.
No. 2 – Your Budget Doesn’t Work Because You Forget to Include Common Expenses
Most people budget for the regular expenses that happen every few weeks or once per month. It is easy enough to remember to include your mortgage payment or rent, regular utility bills, groceries and car expenses. But, what about those expenses that are common, but less frequent, like renewing your auto registration or car maintenance?
The problem: I could do well (enough) most months, but year after year I struggled to come up with an extra $100 cash to renew the sticker on my plates…and car maintenance…well that was a headache every single time something came up.
The solution (for us) was to designate a category in our budget that we planned for miscellaneous use. When we have those infrequent annual expenses that don’t fit into other areas of our budget, we use that money. When we don’t have those expenses, we feel better able to buy things from our ‘wants’ list. It’s a win-win because we can now cover those less frequent expenses and we are adding a few wants to our life without feeling guilty.
No. 3 – Your Budget Doesn’t Work Because You Make it Too Complicated
This is my biggest problem with sticking to a budget. When I start out, I want to get super organized and track all of my spending, literally for every possible type of purchase. It works okay at first because I am all super motivated, but after the first few weeks, I get overwhelmed by the tedious nature of tracking all of that spending.
The problem: a complicated or inflexible budget is a set up for failure. The tedious nature of tracking expenses makes it harder to stick to. I would rebel against my obligation to budgeting and tracking by running out and blowing a chunk of my check on payday.
The solution (for me) was to simplify the types of purchases that I tracked and group as many like things together as possible. We are only two months in, but so far this is going really well. I no longer feel the impulse to blow money on Payday and I have done really well at allocating enough funds for each area.
No. 4 – Your Budget Doesn’t Work Because You Neglect to Use it as a Tool.
A budget is nothing more than a tool to help you manage your money with the most effectiveness. If you are like me and you resist the very idea of budgeting and tracking spending, it probably feels more like a giant obstacle than a tool.
The problem: I felt like budgets were very restrictive and didn’t allow for any flexibility. I would cave under the pressure and act out by buying things that I didn’t want or need. The restrictive pressure actually caused me to spend more money.
Once I learned to look at my budget as a plan for how I wanted to spend my money and started to include smaller, more achievable spending goals, my attitude towards budgeting changed. We went from a strict and tedious budget that allocated every dollar to a specific expense to a more flexible and more generalized ‘spending areas’ budget.
Instead of trying to force myself to make an impossibly small grocery budget work, or stress about running out of my budget allowance and then suddenly needing an essential item, I aim for a more generalized spending goal for all household items.
I understand why the debt-free financial guru crowd thinks that you need to track every single dollar in order to save. But, for me, that caused a lot of unnecessary stress which actually caused me to freak out and spend the money that I did have unwisely. If you tend to be prone to making poor money decisions in the confines of restrictive structure, give it a try with less accounting. Removing that pressure might just help you spend less.
No. 5 – Your Budget Doesn’t Work Because Your Numbers are Wrong.
There are a lot of reasons that the numbers on your budget are wrong. Maybe you are overestimating your income, or underestimating what you spend at the make up counter. Either way, the only way that a budget is going to be a useful tool is if you have accurate numbers.
The problem: The budget looks good on paper, but the bank account can’t make the stretch to the next payday.
There are going to be some expenses that are always going to be variable, regardless of how much planning is done and how accurate the numbers are. Even with these variables, I tend to be able to make it within a few dollars of the same amount for regular expenses like groceries and household items.
When I sat down to redo our budget, I took the last three months of actual expenses. I went through our bank account and credit card statement and categorized every single charge so that I knew exactly what we were spending on gas, groceries, household products, hygiene products, and so on.
Getting accurate numbers and not ‘I hope’ or ‘best guesses’ was another big part of making a budget that we could actually use. Instead of setting ourselves up for failure by being unrealistic with our budget, we created spending areas based on our unique habits and needs.