Why isn't my budget working?
It's frustrating - you've finally put your budget together, but IT ISN'T WORKING! Here are a few reasons why budgets fail. See if any of these apply to you, and if so, recognizing the cause will make the problem easier to fix.
It's Too Hard
This is one of the most common reasons people give up on their budgets - it's too hard! If you've set up a system that requires recording every penny you spend, or have an elaborate formula to determine what your credit card payment should be, chances are you won't stick with it.
Luckily, this is a simple problem to solve - make your budget easier to follow. Automate as much as possible. (i.e. Use automatic transfers into different savings accounts to help you reach savings goals.) Use budgeting tools. (10 Best Budget Apps for 2019) Keep tweaking until you find a system you'll stick with - it really does exist!
It Isn't Perfect
This is related to the budget being too hard, and will sound familiar to the perfectionists among us - you haven't found a method that accounts for every possible scenario, so you're waiting until you find one that does. While there's no method that works 100% of the time, there are many, many methods that work 51%+. (Even 80 - 90%+)
The very best budget is one you'll stick to - sometimes you just have to bite the bullet.
The Snowball Effect
You're doing a pretty good job of sticking to your budget - yeah, you're splurging, but it's just a $2.99 in-app purchase here or $5.00 latte there. No large purchases, but you're coming up short at the end of the month, which makes no sense because on paper your budget works!
While it might not feel like it at the time, those small splurges add up. Wait, are we saying that first you have to give up larger purchases and now you can never treat yourself? No, not at all! The trick is to allow for such spending in your budget. Some people have success with putting their weekly "mad money" in an envelope and when it's gone it's gone. Others ban themselves from Amazon or Google Play. Find the trick that works for you, and don't forget to account for this spending.
Sometimes life happens - you incur an unexpected medical expense, your car breaks down, you lose your job. Life can be a real budget buster. While we can't foresee every circumstance, it's important to include categories like EMERGENCY FUND in your budget. Experts recommend keeping anywhere from three - six months of living expenses in an easily accessible account. (If you don't have this much cash on hand, don't feel bad - you're not alone.) If you're able, adding savings for categories like "Car Fund," "Medical Expenses," and others is helpful. Again, this is your budget, so use the system that best works for you.
The most important thing to do is adjust your budget after an unexpected event and keep on trucking. Dropping your budget altogether isn't going to help you in the long-run. If you need budgeting help, there are lots of resources available, including Citizens State Bank associates. (No strings attached!)
The views, information, or opinions expressed in this article are solely those of the author and do not necessarily represent the views of Citizens State Bank and its affiliates, and Citizens State Bank is not responsible for and does not verify the accuracy of any information contained in this article or items hyperlinked within. This is for informational purposes and is no way intended to provide legal advice.