An acquaintance of mine said to me once that “Budget failure is your own fault” when I asked why failure rates were so high amongst some people who try to use a budget then scrap the idea. I’m not so sure how much I agree with him but to a certain extent it’s not the budget that fails, it’s the operator of the budget and circumstances that surround it.
It’s no surprise that some people have no problem spending more than they earn but they are first to challenge all the reasons why they can’t get a second job or earn extra income to pay down consumer debts. Then again anyone would agree that not much elbow grease is needed to spend money as opposed to earning it.
When Cindy shared her story with us at CBB about how she changed her life after turning to credit cards because she couldn’t make ends meet she says, “it’s the one thing she wishes she had never done”. The greatest success for her was to budget and find a way to earn extra money working from home by making jewellery instead of giving up.
Failure Is Scary
Budget failure scares us a bit but we’re human and make mistakes just like everyone else does. A positive way to look at failure in anything we attempt in life is to learn from our mistakes and try again. Since we are both adamant on making sure we pay our bills on time and continue saving enough money for retirement, it’s important that we stay on top of our budget each and every week.
There are many ways to save money and managing your own money is one of the easiest forms of finding ways to save or areas to cut back on.
Last year I wrote a post about seven top budgeting mistakes and the top of my list was “You don’t have a budget”. I wrote that post not only for those that do budget but for those that don’t budget but want to budget yet don’t know where to begin. Budgets can easily scare people because they believe that a budget hinders their ability to “spend money” freely like they are used to doing.
They also believe that every penny has to be accounted for as if they were in money jail. It’s not a great way to look at your own money but if a budget helps us from spending more than we earn then it can’t be so bad, right? If blowing up your finances is a regular occurance then maybe a budget isn’t such a bad idea.
When we started our budgeting journey it was the first time that we had ever set up our own excel budget spreadsheet on the computer. Budgeting had become a learning process for us both and we messed up at times but as we noticed the gains even if small that motivated us to stick to the plan.
We weren’t in any major debts when we began to budget aside from the mortgage nor were we on the brink of bankruptcy we just wanted to allocate our income into categories so we knew where the money was going and why. Answering the “why” question seemed easy at the time to ask but it really put things into perspective once you think about it.
We sat together and wrote down a list of reasons as to why we need to budget and how we would make the budget work for us. As a couple who didn’t want money to ruin our relationship it was vital for us to make sure we were on the right page.
Sitting down as a couple for many people is probably the first barrier to getting the budget rolling so I always like to encourage couples to talk about money so they understand their financial feelings towards it.
The number one question you should ask yourself before you start a budget is why you want to budget because if you don’t have the same feelings towards budgets then you may end up on the side of budget failure. A budget only works when everyone is involved with the process. Anger and raw emotions about budgeting in a relationship where one or the other doesn’t agree can bottleneck success.
You’re Not Cut Out
There are many people who simply are not cut out for budgeting and many people who fancy running numbers in their head and manage to keep themselves afloat that way. Personally I think the way someone tracks their money is their own business but I’m used to the budget sarcasm we get from some people.
It’s what we want to do and I suggest that anyone who wants to really know what their overall money picture looks like that they should at least give it a shot.
My Life Is A Business
Although a business budget is for a business I often equate our personal finances as our “Life’s Business” that we certainly don’t want to see fail. There are those people who do survive financially even if they use the “I know how much money” we have to spend each money tactic or “We are good with our money” so we don’t need to know where the money goes as long as the bills are paid.
We know, we did just that but we weren’t saving to the capacity we are today while using the budget which made a huge difference to our overall net worth.
I also believe that there are budgets that work and budgets that aren’t quite suitable for certain individuals. I have seen some budgets that are way over the top for us, pulling more information than we would ever need. Then there are easy budgets that didn’t quite give us enough information. We decided that we would learn how to prepare a budget so we could customize a budget template for us to use that made sense.
Do You Use A Budget?
Last week when I did a quick survey on Facebook asking the fans “Do You Use A Budget” and out of 18 responses 11 fans said “Yes, I/we always use a budget, 4 fans said “No I/we don’t use a budget” and 3 fans said “I don’t know how to use a budget” but want to learn how.
Jen a CBB fan who worked with me to prepare a budget for her family of 3 says, she can’t believe how much her life has changed since using a budget.
When people tell me they don’t use a budget because they don’t make enough money, my spouse doesn’t want to or they think it’s silly to budget and a waste of time it’s at that moment when I realize that nothing anyone says or does will change their minds. Sometimes it does take hitting rock bottom for someone to understand change is needed. Budget failure is your own fault when you set yourself up to fail before you have even begun.
If you speak negative about yourself or your own skills and say you will never get any better, they are better than me, life sucks, I’m no good at this, than you invite worry, stress, jealousy, anger and de-motivate yourself from ever firing through tough times. Don’t give up, get up and take charge, you ARE your own boss when it comes to your finances.
Why Budgets Fail?
- You see a budget as a short-term plan rather than budgeting for life
- You don’t understand why you are budgeting
- You give up when you fail or make mistakes
- You don’t take the budget seriously
- You don’t work as a team if you are in a relationship
- You talk negative about budgets
- You fail to plan or set time aside to work on it
- You feel budgets are for people who have debt
- You feel budgets are for those with low incomes
- You guess at your numbers and don’t take time to do your research
- You don’t believe in yourself or your abilities
- You fail to ask for budget help
- You have unexpected Lifestyle Changes
- You are not realistic when it comes to your numbers
- You return to your old ways of wants over needs
Where I don’t believe budget failure is our own fault is when unexpected lifestyle changes takes over our finances until someone can figure out a plan of action. There are many people who have been injured on/off the job, diagnosed with illness or disease, chronic conditions, job loss etc all which can severely impact a budget with no prior sign that something will happen.
You could also find yourself as the caregiver for someone and stepping aside from full-time employment to help your loved one’s can impact your budget as well. Budget failure should not be looked upon as a set-back rather as an inspiration to try it all over again. Don’t freak out if you make mistakes, learn from them and understand that we all make them it’s what we do with them that counts the most.
Preparing an emergency fund for these situations go hand and hand with budgeting especially if you do not have insurances that cover you in the event of a situation that is beyond your control. If you’re not budgeting at least saving a portion of money for times when money is slim is better than having nothing saved at all.
Many lifestyle changes can have a drastic effect on anyone’s finances and sometimes telling someone to get out and get a job is easier said than done. Either way budgeting takes a positive attitude, knowledge, dedication and a desire to take control. I believe that a budget is vital in order for anyone to see their overall financial picture whether you are working or not.
Only you can answer why a budget has failed and perhaps understanding why it has failed and what you need to do in order to successfully implement a system that works for you means simply asking for budget help.
A budget isn’t going to solve all of your money problems in the blink of an eye but what a budget can do is perhaps give you a glimmer of hope that you are on the right track towards reaching your personal finance goals.
What other reasons can you think of that budgets fail?
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