Do you struggle to stick to your budget?Â Have you tried to live on a budget, only to throw your hands up in frustration and give up?Â Think you way through the following list, and see if you can find a few solutions for your budgeting woes.Â Remember, in many cases “the perfect is the enemy of the good“.Â Our goal, when budgeting, is to create a realistic spending plan – one we will actually follow – and not some elaborate spending plan that will only serve to frustrate.
Problem – Too Many Categories
Let’s face it, there are only so many charts, so many calculations, so many categories, and so many money transfers that the normal human brain can keep track of.Â Even with modern budgeting software, creating an overly-complicated budget can lead to stagnation – especially if you are married to a spouse who favors keeping things simple.
Solution – Eliminate Unnecessary Categories
A simple example will best illustrate this solution.Â Here’s a budget outline that has too many categories:
Obviously, I’ve created an exaggerated version of the problem, but you see my point.Â A budget that is too specific, too detailed, will eventually drive its user bonkers.Â Instead, a single category, labeled groceries, would suffice.
Our goal is to create a budget that has just the right number of categories – enough to effectively track our spending, but not so many that we feel overwhelmed.
Problem – No Plan For Unexpected Expenses
Here’s the reality.Â No matter how well you plan, during a typical month, you will have to deal with unexpected, unplanned-for, expenses.Â This is simply a fact of life.Â There’s is no possible way to predict the future, so your budget needs to have some room for life to happen.
Solution – Have A Miscellaneous Expenses Category
Instead of trying to predict the future, have anÂ I-have-no-idea-what-we-might-need-but-I-am-pretty-sure-we-are-going-to-need-a-little-extra-somewhere-category.Â Of course, you want to be realistic, and the amount of money allocated to this category should be reasonable.Â Remember, this category isn’t for emergencies.Â That’s why you have an emergency fund.Â This category is for unexpected expenses – things that just pop up in the course of life.
Problem – More Than One Person Lives Here!
For those of us who love numbers, spreadsheets, and calculations, we can easily find ourselves frustrated with our, how shall we say, less than intense spouses?Â On the other hand, for those who hate talking about (or even thinking about) money, the word budget ranks right up there with root canal on the list of most hated words.Â Need I even mention the struggles that two spenders will face, when trying to live on a budget?Â And think of the frustration if two savers – two math-nerds– happen to live in the same house!
Solution – Agree That Budgeting Is Important
I know that it is difficult, but at some point, each spouse must agree that living on a budget is important.Â Even if you can’t decide, right away, what the proper budgeting technique should be, at least agree that living on a budget does matter!Â For more on this subject, read this article I wrote about how to avoid arguing when talking to your spouse about financial matters.
Problem – Poor Cash Management
Certain budget categories require cash, and many people have poor cash-management skills.Â In other words, if they have cash in their pockets, they will spend it!
Solution – Try The Envelope System
I know, I know.Â It’s old fashioned, it’s old school, it’s hokey.Â Guess what?Â It works!Â When we first started to live on a budget, my wife an I both struggled with cash management.Â After using the envelope system for just a few months, we were able to control our spending.Â Click here to view a video I made describing how to use the envelope system to manage your cash.
Problem – Refusal To Sacrifice
Your budget will not work – it cannot work – until you are willing to make some sacrifices.Â You must give up certain hobbies, certain products, certain services, and certain wants, if your budget is going to work.Â Some of these sacrifices will be temporary, and some might be life-long.
Problem – It’s On The Computer
Your budget will be useless if it simply sits on your computer’s hard drive, especially if you spouse never uses said computer or looks at said budget.
Solution – Print It Out
When we first started, we printed three copies of our budget, and place them in strategic places throughout out our house.Â Remember, this isn’t one person controlling the budget, and giving the spouse money.Â For couples, we need two people working together, equally focused on living on a budget.Â Print that sucker out so that you can see it!
Solution – Be Resolved
Determine, before the month begins, that you are going to do your very best to follow your budget.Â Refuse to give in to old spending habits and thoughts of just this once.Â Remember, your future depends on the choices you make today.Â If your budget fails, let it fail because of a miscalculation, not because of frivolous, unnecessary spending.
Problem – One Bad Month Leads To Surrender
I’ve had one.Â You’ve had one.Â A bad month – a month when expenses rose, unexpectedly, or income shrank, dramatically.Â We have all had to deal with a month where our budget was covered in red, and our best-laid-plans simply fell apart.
Solution – Regroup And Move Forward
Instead of giving up, dig in.Â The reality is, even the best budgets fail, not because the budget is flawed, but because things just happen.Â Maybe you felt frustrated and you spent more than you should have in several categories.Â Maybe you just decided that you were too tired to enter a few transactions, your calculations got all our of whack, and now you just don’t feel like dealing with the darn thing.Â Regroup!Â There’s no better time than right now to pull yourself together and get back on track.Â It’s never too late to start over.
Problem – Unrealistic Expectations
Whenever I look back at some our first budgets, I always smile.Â For the first few months of our budgeting experience, we always underestimated how much we would spend on groceries, and we always overestimated how much we would have available for debt reduction.
Solution – Live, Learn, Modify
Over time, as you get the hang of it, living on a budget becomes second-nature.Â After a few months, you’ll be able to dial in the correct amounts, and things will go much slower.Â Remember, during those first few months, you’ll be learning to live on a budget.Â If you are anything like me, it will take a while to get the hang of it.
Before publishing this post, I opened the floor up to some of my pals over at Twitter.Â Here are some of the struggles that they mentioned –
MrsMicah – I think part of it is because we don’t plan well enough beforehand.Â We don’t include one-time things like dinner w/friends.
annmvolk – It’s because I don’t post mine or think about it after I’ve done my “ideal” (=unreal) budget; I also forget irregular expenses.
thesomedayguy – We fail to remember exact amounts we’ve budgeted–having a tracking tool like Mint would be useful!
EdenJaeger – I can stick to a broad budget without trouble, but when I try to get too detailed I start to fail.Â Life is too unpredictable for that.
ManVsDebt – We fail because we try to make them too complex. The more simple it is, the higher the probability that you form a habit early on.
dee_wilcox – Unexpected expenses (emergency medical, auto, etc)…if the emergency fund isn’t large enough to cover it.
msimonkey – I sometimes fail to stick to my budget when I forget to plan for special events.
tmsullivan – Most people don’t see their budget. There is no visual reminder that says “Entertainment: $100” and a running tally of the expenditures.
MyMoneyMinute – I think budgets are time-intensive the first 3 or 4 months b/c you have to tinker them, and this discourages people and they quit.
SurburbanDollar – It could be that both spouses fail to work together on planning the budget so they will fail to stick to it.
tanneio – We let our emotions take over. We feel sad / hurt / deprived and want to go for an easy fix so we splurge.
freefrombroke – Budgets can be too constricting in that we don’t want them to tell us what to do.
stretchydollar – It’s hard to be consistent – sometimes laziness just takes over.
Final notes –
My wife and I use You Need A Budget software to manage our household finances. You Need A Budget is a long-time sponsor of my site, and I strongly recommend their products.
Twitter is an awesome resource.Â In less than ten minutes, I received the above mentioned Tweets.Â If you haven’t done so, feel free to follow me and send me a Tweet.Â I want to thank all of those who replied.
12 thoughts on “Reasons We Fail To Stick To Our Budget – With Twitter Input!”
This is great! I think that the most important part is giving up early. If you fail, get up and try again.
Thanks for the Twitter-love! This post is a great resource to remind us of why we, as humans, sometimes fail. I think this can help me, both personally and as a blogger in how I attempt to communicate with my readers and their struggles.
Thought I was too late to make it in the post – thanks for the link. This is a great post.
I fall into several of these failure categories at one time or another – I tried cash & could keep good track, my DH and I don’t always communicate well enough, etc…BUT we’re committed and treat these instances of budget failure as bumps in the road rather than road blocks! We’ve been using YNAB, too for 3 months and seeing it all laid out (not quite printable, yet – I think they’re working on this!) has been pretty helpful. In the past 8 months, we’ve paid off $6K in debts and have committed to a credit-free life.
One aspect in the article that I think is VITAL is that for a lot of us, we are truly learning to live this way – we’ve had decades to get into our bad money habits, and taking a few months to ingrain budgeting behavior modifications is not unreasonable. IMHO, o’course!
I think you bring up some great points. I especially agree with making a budget with too many categories, setting to high of expectations and then when we fail one month we are ready to give up. I have taken the approach now that my budget is a PLAN, and sometimes plans need modified to work. If I don’t hit my budget one month the next month I make some adjustments, hopefully eventually I will get a great working plan. My income and expenses are variable right now, which adds an interesting dynamic.
I put my budget on a flipchart and have it stuck beside my computer. Online banking helps and the envelope system takes care of the rest… A lot of what you wrote goes along with the Dave Ramsey total money makeover which is what has gotten me started…
I think the most important aspect of successful budget management is to
1. Have a budget that works i.e. have a realistic budget.
2. Most imporatnt aspect is to allocate roughly 10% of the total budget under miscellaneous exp head to ensure that you do stay within budget. Will help the motivation factor as well which is so crucial
3. Never give up. Like any other habit it works well when you stick to it.
Absolutely fantastic post! You can tell by the brief nature of the comments. I can’t think of a thing to add except, “Well done!”
“And think of the frustration if two savers – two math-nerds- happen to live in the same house!” – Lol. My fiance and I are both budget nerds. Our solution was to not mess with what works and just each keep our own systems. I can’t imagine trying to merge our budgets. He’s biweekly, I’m monthly. He’s current, I use last month’s income. The only similarity is that we both use a zero based system.
Americans have lived on credit way to long, budgets have not been needed because credit cards were always a backup. There is a major adjustment on how we spend and save needed, it will be painful but necessary.
Credit is fine for business and great when there’s an ongoing cash flow but for individuals and families, pay as you go makes much more sense.
I saved for a car and got a good used one from a wholesaler. I got rid of as many credits cards as I could and don’t carry a balance.
I use my debit card and keep track of the balance; if I don’t have it I don’t spend it.
I also dumped my contract cell phone and went prepaid with Net 10, which is better and less expensive than Sprint.
There are a lot of things that you can save on if you try zero-based budgeting and don’t assume anything.
I agree with the previous poster. There are many areas that we can reduce expenses. Having a contract to use a cell phone is worth considering but for some people, Tracfone or another prepaid provider makes sense, especially if you use it infrequently and don’t need a fancy device.
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