Budget Fails & Fixes
The truth is sometimes your budget just doesn’t go well AND now you need to fix your, well challenges. We don’t like to use the word fail, because these challenges can be fixed!
So, what might cause your budget to go off track?
1. Many people simply lose motivation. They try their budget for a couple of months and maybe they don’t really see some great, earth shattering result or they just get tired. It takes work and a bit of extra effort to really handle your budget correctly. Not only do you need to create the budget, you need to track it and follow it.
Especially in the world we live in today of technology and instant gratification, it’s easy to get bored. Or even just get tired of limiting yourself in your spending. It’s kind of like a diet, sometimes you need a cheat day on your diet or a way to reward yourself and not make it feel like you are penalizing yourself all the time. It can be the same with your budget. If you find yourself becoming bored, we recommend looking for ways to make it more interesting.
Fix: A great fix for this challenge is to create a goal. Maybe there is a big ticket item you can save up for. Something that gives you fulfillment. That could be a car or a home. Or it could be something like a computer or new game system. Bring some excitement back into your budget!
2. You are busy!
We are all busy it seems. With work and families and outside activities, there are never enough hours in the day. When we are busy, we tend to forget things or let other things take a back seat. Sometimes the things we forget is to pay our bills on time which can actually lead to costing us more.
Fix: Your fix is to automate as many payments as you can. You can often sign up for bill pay at your credit union or bank. You can also set up auto drafts or payments with the account holder. I do this with my car note in particular. It helps you make sure all your bills are paid on time!
There are even some apps that will help you track your spending and send you alerts when bills are due. Look around at what’s available and fits your needs.
3. Not setting a realistic budget.
This can go a couple different ways. Either you are super excited and you want to do a great job at getting your finances under control so you start cutting expenses but you cut them to a point that its just too much. You don’t allow yourself new clothes or any money to eat out EVER.
The other side of that is not including all your expenses. You don’t really account for all that you spend. You eat out for lunch 5 days a week at $15 a time but you really only take out say $10 a day. This will leave you short.
The point is, you can’t operate on a budget in this way. And you end up disappointed as you start to see the reality of your situation.
Fix: Track your budget realistically for 2-3 months so you get a REAL look at what’s happening. Then look at your budget and see where you can cut some expenses. But don’t make drastic cuts. Cutting a whole category is probably not something you want to do either. Start with cutting 10% in that category, or anywhere you are making cuts. If you have a category that is particularly frivolous, you may go above 10% but don’t cut the category completely at first. Start with not spending that budgeted money for a month or so and see how it goes. See if going without that category really works. If you choose to cut it later, then you know it’s a realistic option and in the meantime, not spending that money will create a little buffer in your budget during that time.
Also, make sure fun is part of your budget. Just like the cheat day on your diet you have to allow yourself some fun and to live and enjoy your life. You can look for less expensive things to do or ways to make your fun more cost effective, but it still has to be there.
4. Your bills are simply too high. As much as you cut your day to day expenses, this may not be helpful if you have fixed bills that high. If those bills make up the larger part of your overall expenses, it may leave you no choice but to cut back in other categories.
Fix: This can be a little trickier than just cutting back on how often you eat out. You have to start by evaluating what bills are high. Is it student loans? Your mortgage? Or maybe credit cards? Those can kill a budget quick.
You may need evaluate these one by one and see where you can help yourself.
Look into options to refinance your student loans. You can do the same with a mortgage or car loan. Are you living beyond your means? By that, do you have bedrooms or space you simply don’t need? Or a car that is too big for your needs. Downsizing may be a good option.
For credit cards, they can seem overwhelming but they can be overcome. You have to create a plan to pay down the balances and most importantly, stop using them and running up your balance.
5. You forget things in your budget. You wrote down your bills but you didn’t budget for other expenses. This is things like car maintenance that you only do every 6 months. Or back to school expenses like supplies and uniforms. All the sudden they are here but they aren’t part of your fixed bills so you didn’t count them. Even a higher electric bills during the summer heat needs to be considered. So consider ALL of it.
There’s also the auto payments for memberships that you tend to forget. You signed up for an online streaming service but never really watch it but the $5.99 charge still comes every month.
There’s even credit card spending to consider. If you are used to charging $250 a month in food on your credit card, that really needs to be counted as an expense and budgeted.
Fix: Look at all your expenses and write everything down. Flip through a calendar and look at what expenses come up each month. You can use set aside savings to take care of those expenses or you can even open a special savings account just for those kinds of expenses if you want. The key is to not forget about them.
And as for those memberships, cancel whatever you aren’t using!! No need to waste that money that you could be using for something else or saving!
6. An emergency happens. This one can derail a budget quickly. It’s not something you can really plan for and you can’t predict what it might be.
Fix: Prepare yourself for it. Save in an emergency fund. It is one of the most important things you can do in your budget. Put money aside that can help pay for those unexpected events. This can be illness, home repair, car repair and more.
Consider looking at your deductible for your home and car and create a goal to have enough for those in your savings account. We all hope these things won’t happen but it’s best to be prepared.
7. Not tracking and adjusting. Many people take the time to create a budget but then they don’t track their spending to put their hard work to the test.
Fix: Tracking is a very important part of budget success. It holds you accountable so that you stick to your numbers. It also lets you see how you are really spending your money.
You may discover that you are spending more or less in specific categories than what you had budgeted. In this case, those categories should be adjusted. This can help you see more success in your spending. If you discover areas where you are spending less than you thought, you could put that excess to another category. This could help you pay off debt faster or better yet SAVE more!
This is also important to do as your life changes. Job loss or a promotion could change your income. What if you move or get married or expand your family? All those things will change your income and expenses. So be sure and revisit your budget from time to time to make sure it’s still working for you.
8. Everyone not being on board and giving into temptation can be a big challenge. If you share a budget with someone else, like a spouse and they are not in agreement with your proposed budget it will create challenges for your success.
If this person is not on the same page you may see them indulging in things that are outside of your budget. This could be things like clothes or fine dining or even bigger ticket items like cars.
Fix: A good way to fix this challenge is by looking for common goals. Like we discussed earlier with your motivation. Find something you are both motivated to save for or work toward. This could be a house like we mentioned or even a dream vacation or your childs education. It may provide the necessary motivation to get them on board and help you both be more aware of not indulging outside your budget.
Most of these ideas are pretty straight forward I think but they will require a little extra effort to make them happen. An accountability partner could be helpful to keep you one track. Your significant other is great for that or even a good friend or family member could help.
BONUS TIPS!
1. When you are creating your budget or tracking it make sure you use a system that works for you. If you are tech savvy, by all means find an app that can help you. But if tech is not your thing, an excel spreadsheet or simple pen and paper is fine to use. You are more likely to continue your tracking and budgeting if you use a system that suits you. Therefore, you will see more success.
2. Don’t beat yourself up if things don’t go perfectly. Your first draft of your budget will most likely not be your last. It takes some time to work on it and tweak it to what you need and what works best for you. So give yourself a break! You will get where you need to be, give yourself some grace and some time to get there!
And as always, if you need help sorting this out we at First Pioneers FCU are always here to help! Sometimes just sitting with someone can help. Another pair of eyes to offer suggestions can really get you moving in the right direction. So feel free to reach out whenever you need it!