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7 Reasons Why Your Personal Budget Is Failing and How to Fix It

By Jacqueline Curtis

budgetingI am a serial budget-maker. The number-crunching, the spreadsheets, the organization – I’m absolutely addicted. However, over the years, I’ve nursed a love-hate relationship with my budget. I love how it organizes my funds, but I hate actually having to adjust my spending to meet what a spreadsheet tells me.

So, what’s someone with the best intentions to do when a budget isn’t working? It’s usually human error that makes a budget fail, and by investigating for possible gaffes, you might find out where you’ve gone wrong. Don’t fear your budget – just be vigilant and triple-check it for accuracy to ensure it works with you, not against you. And always keep an eye out for the major reasons that most budgets fail.

Reasons Why a Budget Fails

1. It’s Too Restrictive

If you really want to save money, you might be tempted to strip your spending down to the bare minimum and challenge yourself to live with it. If you succeed, you’re going to show a hefty surplus at the end of the month. Of course, when it comes to the actual execution of a restrictive budget, you may be tempting yourself to max out your allotted funds, go over your spending limits, and finally toss your budget in the garbage because it “didn’t work.”

Solution: Pad your budget a little, and be ambitious as well as realistic. Cut back in a few areas at a time, rather than trying to completely overhaul your lifestyle all at once. While having a big surplus at the end of the month looks great on paper, if you can’t pull it off in practice, it’s an exercise in futility.

2. You Don’t Set Goals

It always helps to keep your eyes on the prize, and setting a goal can certainly help keep you motivated to stick to your budget. However, while “getting rich” is definitely an admirable goal, it may be too broad to really keep you on track when the going gets tough. The same goes for paying off all of your debt, or building up a down payment for a house.

Solution: Determine to save or pay off specific amounts in a given time period, and make sure these are achievable goals. Set other mini-goals along the way to help you stay strong when your money is burning a hole in your pocket. Then, reward yourself – modestly – when you meet them.

3. You Haven’t Adjusted It Since Day One

The thing about budgeting is that it’s all guess-work until you put it into practice. When you first draw up a budget, you can use utility bills, credit card statements, and pay stubs to develop the most accurate spreadsheet possible, but that doesn’t mean it’s all going to run smoothly once you put it into play. You’re going to have to make adjustments month-to-month, and if you haven’t touched your budget since you first formulated it, it’s probably not working out very well.

Solution: Revisit your budget on a monthly basis. You don’t have to give it a thorough overhaul – just devote a few minutes to adjusting for an extra windfall, new commissions, fluctuating utility bills, or anything else you didn’t plan for in the month prior.

4. Your Spouse Isn’t On Board

If you’re determined to maintain your newfound self-discipline and financial responsibility and your spouse isn’t on board, your budget isn’t going to mean much – especially if your spouse happens to be the big spender in the relationship.

Solution: If you haven’t had the big money talk in your marriage, now is the time. Sit down and discuss your financial philosophy, and make sure that you have all your numbers handy. Point out that a budget isn’t necessarily restrictive. Instead, it simply acts as a road map for your finances. When your spouse sees you won’t have to drastically alter your lifestyle to gain the positive effects of a budget, you might find you’ve got a more willing partner than you initially thought.

budget

5. You Didn’t Plan for Emergencies

A budget is well and good until your dog breaks his paw, your car needs a new transmission, or your toddler needs his tonsils removed. Emergency expenses can completely derail a carefully detailed budget if you don’t account for them. Before you know it, your monthly money is gone before you’ve even paid your bills.

Solution: Build up an emergency fund. Aim to have at least six months’ of living expenses saved, and shoot for more if possible. If you don’t already have the funds to create one, devote a line in your budget to establish it. Consider it a personally administered insurance policy, and take comfort in the fact that your premiums are still yours to keep, even if you never have to file a “claim.”

6. You Didn’t Give It Enough Time

Count me as one of those people who gets impatient with her budget. I’m so excited to see the fruits of my labor that you can find me obsessively checking my bank balance and wondering if I’m a millionaire yet. However, the truth is that budgets take time, patience, and a bit of trial and error before they really produce significant results.

Solution: Consider your first few months a beta test for your budget. If they don’t go smoothly, simply make some adjustments and try again. It can take time for you to iron out the creases and for any real changes in your spending habits and financial management to take effect. Go easy on your budget – and yourself – and give it a chance.

7. You Really, Really Hate Budgets

Hey, a budget isn’t the be-all, end-all to financial management. If the sight of budgeting software makes you steam, explore other methods of managing your money without all the spreadsheets and columns.

Solution: Seek out alternative budgeting techniques that may work better with your lifestyle and income. Try withdrawing the cash you need for a week, two weeks, or a month at a time, and when it’s gone, it’s gone. If you stick to the rules, this kind of regimen can teach you pretty quickly how to conserve money. Research your options and test a few budget alternatives to find one that works for you.

Final Word

If you stick to it, a budget is going to work. It can help you make smarter financial choices and give you a sense of control over where your money is going each month. However, budgeting is not an exact science. It takes work, tweaking, practice, and a lot of trial and error to make it effective in the real world. If yours is tanking, don’t ditch it. Just retool it and try again until you find the right balance.

Do you have trouble sticking to your budget?

Jacqueline Curtis
Jacqueline Curtis is an experienced style expert, and she focuses on getting high fashion on a tight budget. She writes for several online publications, including her own fashion blog, How Not to Dress Like a Mom, and specializes in fashion, finance, health and fitness, and parenting. Jae grew up in Toronto, Canada, but now resides in Utah with her husband, two kids, and prized shoe collection.

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  • http://www.thenorwegiangirl.com/ The Norwegian Girl

    for me it`s impossible to have a fixed budget. I need to readjust it every month based on what kind of expenses that month might bring.

  • http://mydebtucation.blogspot.com/ @pfinMario

    Really? I’m just the opposite. I love the feeling after putting together a budget when I get surprised by where I’m actually spending money. It makes me feel so much more in control by de-mystifying where everything goes

  • Alan@escapingmydebt

    These are great tips. My wife and I never really have done a budget per se except cap our entertainment spending as an allowance. She has one and I have one since we do not always do things with each other. Within the next week or so when my time frees up a little from school. I plan to pull our past few credit card bills to go over the expenses and to see what they are for and try to select areas where we can really try to start saving and put caps on it. One of our biggest costs is gas since our commutes are kind of long but trying to carpool more often to help out.

  • David

    Hi Jacqueline, These reasons are worth looking at very carefully. We all have to find out why our budgets fail and set financial goals to control household spending.

  • http://latestaccounting.com

    i never make a budget.

  • Casey Lewis

    When I coach with clients on their budgets a common problem I see is that they haven’t adjusted their budget at all. We recommend that during the first 90 days of working a new financial plan you have a budget meeting monthly and then have weekly checkups to make sure you’re on track. If you need to make adjustments, it’s much better to realize that at the end of week one than 6 months later.

  • JJ Hollis

    Hi Jacqueline,
    Not a big fan of budgeting per se, but my wife and I have found a zero-based budget to work very well. We break it down every 2 weeks and it must be equal zero, meaning every dollar has a place to go/

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