Why Personal Budgets Fail (and What You Should Do Instead)
If you are in to budgeting, you must have realized by now that creating budget is the easiest thing to do. The most difficult and tough task is to stick to it. But a little tweaking of your habits and thoughts can work wonders.
Have you ever set a personal budget for yourself? Are you still sticking to it? My guess is that you answered these questions in a sequence of "yes" to the first, and "no" to the second. We all have great intentions of spending our money wisely in accordance with our plan, but it hardly ever happens that way. At the end of the month (if we make it that long), we realize that we aren't able to follow our budget at all and we just decide to throw in the towel.
Budgeting doesn't have to be like this though, and it doesn't have to be a chore either. It can be both fun and can be fairly simple at the same time. In order to get you through this process and follow your budget a little better this time, let's take a look at why personal budgets often fail.
You Cut Out The Fun
Often times, when people make a budget for themselves, they just put all of their known bills in there and set up an amount for the "food" category, but when it comes to having fun, this is left out of the budget entirely!
Sure, you might be tight on money, but you should still do your best to budget in some fun. Without any release from the daily grind, you're going to make yourself nuts, and you're ultimately setting yourself up for failure.
You Forgot About the "Unexpected" Expenses
There are plenty of bills that hit your account each month. These are the ones that are easy to predict, but then there are bills that only happen once every few months, or every year. Things like car insurance, registration, oil changes-these don't pop up each month, but you should still put them into your monthly budget because you should be saving up for these expenses.
Then, there are items like your roof. It most likely doesn't need repair for another three or four years, but when that $5,000 expense comes your way, you're going to wish that you'd been saving up for it all along.
You Have High Expectations
It takes awhile to create that budget, and when you're done you think that there couldn't possibly be an expense that you missed and your numbers on each category are perfect. Then that first month comes and goes and you overspent your budget by $400!
You didn't spend on anything lavishly, so how could this have happened? Well, you most likely forgot a bill, or maybe you severely underestimated that grocery bill. The point is, you will not be able to create a perfect budget the first time. For the first six months, it will just be a work in progress, and that's ok!
You're Using the Wrong Tools
Are you really comfortable with the tools you are using to manage your budget? Is your budget easily accessible? When you need it, how much effort do you put in to understand the current pattern and deviation? A tool is only as good as how well you use it. If you are using a professional budgeting software, are you conversant with it? On the contrary, if you are using a traditional pen and paper technique, are you keeping track of all earning and all spending? Not using a tool properly (or not knowing about the tool) is one of the biggest reasons of budget failure.
If you can get over these hurdles, you'll be much closer to making that budget that works for you and that you'll be able to stick with. And, once you've got your master budget, life just gets that much easier.
Image remixed from Doremi (Shutterstock).
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