Have you ever started a budget just to watch it fail miserably? I know I’ve been there. The problem for me was that when I fell off the budget wagon, it took a while for me to get back on track. Part of me was discouraged and the other part wasn’t even sure how to set a budget at all.
If you can relate, just know that there is hope! You can actually succeed with a budget. One of the best ways to be successful is to know why you failed in the first place, so here’s a glimpse into why my budget failed a few time.
Quick Navigation
1. Unrealistic Goals
You can’t expect to pay off $50,000 in debt in one year if you only make $40,000. Sounds obvious, but before you make your goals, find out how much discretionary income you’re projected to have in the year and make your goal around that figure.
The same is true for each category. If you need to cut your grocery bill, you’ll probably have better success cutting it over 2-3 months and not in one fell swoop.
2. No Room For Fun
Nothing’s worse than feeling like you’re a slave to debt AND a budget. My wife and I felt more in control when we allocated some ‘fun’ money in the budget. We used $40 each per month and simply budgeted for it. It made sticking to the rest of the budget easier once we implemented the ‘fun’ account.
3. It’s Not Simple Enough
When we first started keeping track of our spending, it was really a complicated mess. There were way too many categories and it was tough to cut even one of the categories. Reducing the categories from 20 to 12 helped us to make better decisions and to stick to our goals for each month.
4. Too Hard To Monitor
One of the hardest parts of a budget first starting out was monitoring the transactions. We solved this problem by using mint.com to track our spending. Ever since then, our transactions have fallen into each category almost automatically and it’s been really simple.
Other options include mvelopes, an online budgeting tool that is based on the envelope system of budgeting. Of course, you can always break out actual white envelopes too! The important thing is to make it easy on yourself – and these tool can help.
5. Everything’s an Emergency
Emergencies are everywhere and they always seem to have price tags of $500 or more. They can really kill your budgeting enthusiasm, but having an emergency fund can really keep you on track.
We learned this the hard way, and it took a while to finally build our emergency fund, but it’s made budgeting so much easier.
6. You’re All By Yourself
If you’re happily married, you shouldn’t feel alone in your budgeting goals. It sounds cheesy, but you need to communicate about which categories are necessary and which ones can be slimmed. Practice an ‘open budget’ policy and review the categories together every month. Speak up if you think something needs to change – but do yourself a favor and leave the blame game out of the conversation.
7. You’re Not Serious About It
I can write about budgeting until my keys break off…it doesn’t do any good unless you really want to get on track with your money.
So how do you get serious about a budget? Well, it’s different for everyone. For us, we knew that our goals to pay down debt would never happen unless we stuck to a budget. If you’re having a hard time convincing yourself, go back to #1 and review why you’re budgeting in the first place. If it’s important, you’ll find a way to make your budget work.
Have you ever failed at a budget? What did you do to get back on board with it? Did you do any of the items presented above?
Ensuring you keep room for fun is important, even when paying down debt. If you try to pinch every penny, you often end up with “frugality fatigue” — and then go splurge. (The same happens with dieters who have too strict of a diet — they ultimately splurge on chocolate cake.) Building small, little treats into your budget (and your diet!) will help you stay on track in the long-run.
As far as failing at budgeting, often. We just figured it was part of the tweeking process. We finally have it smoothed out so that the categories and amounts pretty much transfer over from year to year. The biggest killers have been unexpected medical expenses and over the top car repairs. We do budget for those items, but sometimes… That’s why we keep a really big emergency fund.
Agree whole heartedly with the “mad money” account. Only sane way to go.
@ Afford-Anything – I like the term ‘frugality fatigue’. If you don’t give yourself room to enjoy life, you’ll likely burn out – that includes dieting, working, finances..you name it.
@ Olivia – Tweaking is the name of the game when it comes to budgeting, especially at the beginning. You have to be flexible and understand that expenses change and so do your goals.
Thanks for your input!
Great post! We’re halfway through paying off 45K in consumer debt. If all goes as planned this year we should be done by February 2012. Woo Hoo! This is a great post. I’m sharing with my readers on Saturday during my round up post.