I hear people complain about budgeting all the time. Some just have a love/hate relationship with it. When I ask them why, the usual answers are ‘I hate math’, ‘it’s a waste of time’, or ‘it’s just too much work’. While all of these are legitimate reasons, there’s usually a bigger underlying reason: their budget doesn’t work for them.
Maintaining a budget can definitely take up a lot of time and be overwhelming. But it doesn’t have to be as long as you set the budget up correctly. A lot of times, your budget isn’t working because you haven’t tailored it to your needs. A budget can be a very powerful tool, but only if you use it correctly. Let’s take a look at 5 common reasons why a budget just doesn’t work:
You’re Spending Too Much
It might seem obvious to say that you shouldn’t spend more than you make, but that’s the biggest challenge some face when doing their budget. If your expenses exceeds your income, something’s wrong. Learn to live within your means. Otherwise, your financial outlook will be bleak.
You’re Budgeting The Wrong Categories
It can be difficult to figure out what you should be spending your money on and how much exactly. Sometimes, we can budget the wrong amounts in the wrong categories. This is especially problematic when you underestimate what you’re going to spend and end up not having enough. Review your month-over-month expenses in each category to come up with more accurate numbers.
You’re Not Being Realistic
Even though we create budgets with the best intentions, we’re just not realistic about it sometimes. We tend think of a budget as the ideal scenario, even though we need to look at it as a reality. Challenge yourself to save more, but be honest with yourself at the same time – is your budget realistic or are you setting yourself up for failure?
You’re Not Sticking To The Numbers
While your budget isn’t an end-all-be-all when it comes to spending, you should stick to what you decided on as much as you can. Especially for impulsive spenders, it’s easy to make an unplanned purchase and say it’s no big deal. But think of the bigger picture. How will the purchase affect your budget today and your finances tomorrow?
You’re Not Reviewing The Results
Your financial situation can constantly change. You need to adapt to the changes in your life in order for your budget to work. The numbers aren’t set in stone once you make a budget either. You should routinely review it and make changes as necessary.
Budgeting isn’t always fun but it doesn’t have to be painful either. By avoiding these mistakes, you can create a budget that really works for you. A budget can be your best friend but only if you let it.
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