4 Reasons Why Your Budget Failed – And How To Fix It
For anyone trying to take control of their finances, creating and managing a budget is absolutely vital. Here, you can see all your earnings and assess your out-goings.
But for even the most financially conscious among us, budgets still have a habit of failing. Ah, those best laid plans…
If your budget is spiralling out of control, here’s why it’s probably happening – and the changes you’ll need to make to get back on track.
It wasn’t flexible enough
The trouble with many budgets is that the set-up is so rigid. You have X amount to spend on Y; Z amount to spend on W, and so on. So, you diligently allocate the money across all the categories in your budget, from food shopping to travel costs. No more, no less.
However, budgets can and should be a lot more flexible. They’re not there to simply restrict how much you can spend, but to make sure you can keep track of your finances. Sometimes prices go up, sometimes they do down, so instead of rigidly sticking to your budget, be realistic and update accordingly.
Get back on track: Update earnings and out-goings on a regular basis to reflect actual costs. Your budget should be a living document, not a static one.
You tried to be too accurate
One of the biggest problems with managing our budgets is that we try to be too accurate. That’s great for business book-keeping, right? But for a household budget, you can generally afford to be a little less accurate – to an extent.
If you’re desperately trying to count absolutely every penny, you end up bogged down in all the finicky details, scrutinising every receipt and bill until it all becomes a confusing mess. As if that wasn’t bad enough, it’s likely that, putting yourself under that pressure will mean you risk ‘falling out of love’ with your budget and letting it go to pot.
To keep things simple, instead of charting every expense down to the penny, round up your finances to the nearest pound. It’ll make it a lot simpler to gain that all-important overview, and you won’t be lost in a sea of unlovable numbers.
Get back on track: Round up your household accounting – it’s less exhausting and time-consuming, and doing so means you’ll have a little extra cash than you budgeted for.
That last-minute emergency spending
The car needs fixing. You’ve got to call the plumber. The dog needs his meds. Whatever it is, emergency spending risks throwing your entire budget out of sync –
Since it’s not a direct or present cost, unlike our phone bills, a lot of people don’t factor emergency spending into their budget each month. So, when they do come up, they force you to scrabble around to make ends meet (and get your budget into some sort of order!).
Instead, consider budgeting a set amount each month for those emergency out-goings. Think of it as your ‘everyday insurance’. The ‘just in case’ fund. If you don’t want to build emergency spending straight into your budget for whatever reason, just pop that cash into your savings account and budget for it in that way instead.
Get back on track: However you track it, set aside a small amount each month that’s strictly for genuine emergency spending.
You had no clear goals
Maintaining a budget offers a great financial overview, but there needs to be more to it than that. If you’re managing a budget without a goal, you’ll likely fall out of love with budgeting. After all, it can be a real slog sometimes, and without a target, we’d all start coming up with excuses why we can’t do it.
Setting financial goals – whether it’s saving for a holiday or seeing how much unnecessary spending you can cut out – is a great way to stay motivated. And, at the end of it all, you can get a satisfying kick out of knowing just how hard you worked to achieve your objective.
Get back on track: Know what you really want to get out of managing your budget, and set realistic goals to achieve that. And take baby steps.
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