If you don’t use any kind of written budget, you have lots of company. According to a Gallup poll, only about a third of Americans prepared a detailed household budget in 2013.
That’s not to say everyone succeeded. The fact is, using (and sticking to) a written budget can be a huge chore, especially at first. And no matter how dedicated you are, it almost always takes a while to get used to creating a budget and living within predetermined spending limits.
Be Realistic About Your Budget
Still, there are plenty of ways to set yourself up for failure if you attempt to use a written budget without being realistic. And if you’ve tried to budget and failed, you’re probably wondering where you got off track. Here are a few possible explanations, along with how you can turn things around:
1. Your Budget Is a Fantasy
In a perfect world, groceries would cost $150 a month and your car would change its own oil for free. Unfortunately, you don’t live in that world. So why does your monthly budget? If you want your written budget to work, you have to be realistic about your spending plans and set yourself up for success.
For example, if your old bank statements reveal you’re spending $900 per month on food, use that figure to come up with a realistic goal for the following month, and so on. Taking things slowly will help you figure out what kind of spending limits you can realistically live with while also helping you avoid becoming discouraged.
2. You Aren’t Including All Your Expenses
If this is the case, it’s no wonder your spending far surpassed the written financial plan you laid out.
If you want your budget to work, you have to plan for almost any expense that will come up during any given month. And that might mean digging deep when you write out your budget.
To make sure it’s inclusive, get out your calendar and brainstorm any expenses that are expected to arrive in the next 30 days. Do you have to purchase any birthday gifts? Do you need your oil changed? Do you have any insurance or tax payments due that aren’t paid regularly? Make sure any expenses you can reasonably expect to incur make it on your budget.
3. You’re Not Tracking Your Spending
If you’ve taken the time to create a budget with predetermined spending limits but don’t watch your spending closely, you’re destined to fail. Why? Because it’s far too easy to spend too much money on groceries, entertainment, or at the mall if you’re not checking in at least once a week. That’s probably the reason you created a budget in the first place, right?
If you want to stick to the plan, make sure to check your spending a few times a month to make sure you’re still on track. If you use credit or debit cards, simply log onto your online credit card or bank account and tally up your purchases or totals in each category at least once a week.
If you’ve spent more than half of your grocery budget before the month is half over, for example, make sure to put the brakes on for the rest of the month. Sometimes the only way to stay on track is to watch your spending and learn to stretch your budget so that it lasts the entire month.
4. You’re Spending Too Much
Seeing how your bills stack up against your income is one of the first steps you should take when creating a budget for the first time. However, once you do, you may quickly find that your spending is too high when compared to the amount you bring in. And in some cases, you might even find you’re spending more money than you make — and going into debt.
If you’re spending more than you earn or simply not saving enough, you may have to take drastic action. In other words, you need to drastically reduce your monthly bills by whatever means possible, and that might mean going without in some cases.
If you’re looking for the easiest places to cut, focus on the low-hanging fruit first. For example, see how much money you’re spending on groceries, dining out, and entertainment and see if those expenses are out of line. Then consider canceling your cable TV package and shopping around for a cheaper cellphone plan. There are plenty of ways to save if you’re willing, but the key is actually doing it.
5. You Gave Up Too Quickly
Learning to live within limits is not always easy. In fact, it can often take several months of tweaking and lots of ups and downs to get to the point where your monthly budget is working properly on a regular basis.
But that doesn’t mean budgeting isn’t worth it. Almost anything worth doing takes time, patience, and perseverance, and sometimes you have to try a few strategies to find one that works. In other words, don’t give up!
If you tried to budget and failed, take some time to figure out what went wrong. Then start the next month with a new resolve to make your budget work once and for all. Know that it can take a while to get it just right, and do whatever it takes to get there.
Creating a written budget and learning to stick to it isn’t always easy, but it is totally worth it. A written budget basically serves as a plan for the money you work so hard to earn. And if you’re not going to create a plan, why bother working so hard to begin with?
If budgeting hasn’t worked in the past, it might be time to give it another shot. You have nothing to lose but a lifetime of wealth to gain if you can make it work — once and for all.