If you are not using a written budget (paper, spreadsheet or even an app), you are not alone. According to a 2013 Gallup poll, 1-in-3 Americans do not have a written budget. That means two-thirds of American households are operating without a plan.
Now, just because you may have a budget does not mean that it will work and you will be successful. To be frank, 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 used to, and implementing, the spending constraints that 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. The 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.
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.
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 that might come up over the course of the month.
Take time at the end of each month to look ahead and determine events and things coming up, such as the vacation or 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 each month, and the payments can come from your savings account rather than your budget).
This is very common for many people. The reason is that once you actually see the expenses lined up next to the income, you are spending more than you make. This means you have to make changes to your budget.
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.
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.
4. Not Monitoring Your Budget
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.
A great way to do this is to update the budget monthly. 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.
(Just like your budget, monitoring your credit report should be a priority. You can also keep an eye on your credit scores for free every month on Credit.com to track where you stand.)
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.
This is why you must have an emergency fund. Money needs to be set aside each month to cover these expenses that 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.
6. Not Giving It Enough Time
If all professional athletes quit practicing after just one month, we would have 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.
Instead, keep in mind that the first three or four 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.
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Image: David Sacks