Do you know why your budget doesn’t work? It is probably due to one of these six reasons.
If you are not using a written budget (paper, spreadsheet or even an app), you are not alone. According to a 2013 Gallup poll, one in three Americans does not have a written budget. That means 2/3 of American households are operating without a budget!!
That being said, just because you have a budget does not mean you will be successful. Following a budget is not easy. If it were, we would see more people using one than trying to ignore it completely.
Even the most diligent people can have a tough time getting use to – and implementing – the spending constraints which are tied to a budget. This can cause those budgets to bust and quite often fail.
Why does this happen? Why is it that so many budgets never work? We’ve got six of the most common reasons budgets do not work.
1. Your budget is unrealistic.
Who wouldn’t love to spend just $50 a month on fuel and $200 on groceries? That would be incredible, wouldn’t it? However, that is not the way it works. You need to be completely honest about the numbers you include on your budget.
The fix: One of the easiest ways to do this is by creating and reviewing a spending plan.This simple form will help you analyze and track your real life spending over the course of a month. So, while you might want to see that your budget shows $200 for groceries, if you are spending $550, your budget will not work. Be honest and make sure your budget truly reflects the way you shop.
Read More: How to Create a Spending Plan
2. Leaving items off.
When planning out a budget, did you remember that you have that birthday next week? What about needing to purchase new tires for your vehicle? You need to make sure that you are accounting for every expense which might come up over the course of the month.
The fix: Take time at the end of each month to look ahead and determine events and things coming up, such as the vacation or the birthday. It may be time for insurance premiums to be paid. Make adjustments to the next month’s budget (but if you are really smart, you are already saving for these monthly and the payments can come from your savings account rather than your budget).
Another reason your budget doesn’t work is because you spend more than you make. This means you have to make changes to your budget.
The issue is that many do not want to do this. They just can’t. If you are spending more than you make, your budget will never work. You must change your spending habits in order to have a successful budget.
The fix:You may need to scale back on dining out or entertainment. It could be extreme enough that you need to cut expenses, such as cable, directly from your budget.
Read More: How to Prevent Overspending
4. Not monitoring it.
A budget is not a “one and done” financial goal. A budget is always changing to due to income fluctuations, life events and more. Your budget will need to be checked frequently to make sure it aligns with your needs.
The fix: Update your budget monthly, by scheduling a due date on your calendar. There are times when adjustments will not be needed, but other times, you will need to tweak it. You might find that you are budgeting $500 for groceries, but costs have gone up and so now you spend $575. That means you have to fix the budget to stay in line with what you need.
Read More: How to Create and Use a Cash Budget
5. Forgetting emergencies.
Life has a funny way of throwing curveballs your way when you least expect it. What happens if the furnace goes out or your son breaks his arm? These items are not on your budget and there was no way to plan for them.
The fix: You
need must have an emergency fund. Money needs to be set aside each month to cover these expenses which come up. That means you need to add it as a line item on your budget and always save so you don’t blow your budget in these moments.
Read More: How to Quickly Boost Your Emergency Fund
6. Not giving it enough time.
This is the most common reason why your budget doesn’t work. You quit before it has a chance to even try to help you.
If all professional athletes quit practicing after just one month, would would have…well….no professional sports. The same is true with your budget. If you quit when it gets hard or don’t really try, then you are destined to fail.
The fix: Keep in mind that the first 3 – 4 months are going to be rough. These are the months when you are going to have to make a lot of changes to the budget so that it will work for you. Once you get through this period, it will get easier and you will be glad you did not quit or give up.
A budget is not fun. If it were everyone would have one. They would work perfectly. No one would fail. However, that is not reality. It takes a lot of hard work and dedication, but when you stick to it, the rewards will be worth it.