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5 reasons why your perfectly chalked up budget might be failing, along with their solutions.
So you’ve chalked up your perfect budget and you’re happy that your finances will be finally sorted and you’ll be able to keep track of all your expenses. But all your enthusiasm goes down the drain when you see that your budget is failing or not working out for you. Does that sound like something you’re struggling with too? Are you having a hard time keeping up with your budget? We get it.
But don’t lose hope, don’t give up on your budget so easily. While creating a budget isn’t much of a complicated process, implementing it successfully is a big challenge. Let’s understand what a budget is and move on to breaking down the possible reasons for its failures, along with the solutions.
What is a Budget?
A budget is a summary that tracks your income and expenses for a particular period of time. It is designed for a short or longer period of time and is majorly used to control your expenses and financial obligations. The main aim of maintaining a budget is to ensure that you always have sufficient money for getting and prioritising the things you need. Hence, following a budget will help you to keep track of outstanding debt, loans and additional expenses to be incurred.
Reasons why Your Budget in Failing:
Problem 1: Unrealistic Budget
One of the main reasons for budget failures is the unrealistic approach - like setting impossible objectives, restricted expenses or over spending, starting with zero budget, limited outgoings etc. These approaches lead you to abandon your budget eventually when you don’t see the required results.
Be realistic. Reconsider your goals and the time frame you’ve set for yourself. Try to find out the reasons for any inconsistencies and workout for the solutions. Find out the best budgeting method that works for you. Read about the Savings Mantra - the 50/30/20 rule. Track your spending patterns, setting relevant objectives, etc.
Problem 2: You Don't Know Why it is not Working
Sometimes things do not work out as planned. Picture this: You have joined the gym to reduce your weight. But after a week's time your weight remains the same. You don’t know why high intensity workouts are not acting in your favour. Either you are ignoring your diet plan or you are overeating. You’ve got to balance between the two - your diet as well as physical workouts.
Similarly, you have made all necessary adjustments and set up a budget to control your expenses. But within no time you realise that this isn’t working for you. Due to unknown reasons your budget system keeps on failing.
You are never going to find out unless you work on it. Ask yourself why, where and what caused the failure? Sit with the budget for sometime. Break down the numbers. Some of the possible causes could be overspending on credit cards, unsettled bills; too many loans or your expenses are more than your earnings. Rework on your budget once you find out the root cause.
Problem 3: You are not Aware of Spending Patterns
Are you a shopaholic who loves to spend money on buying luxury items or beauty treatments? People often spend more than what they earn and end up being broke at the end of the month. Spending tons of money keeps them happy, contended or fulfils their esteem needs. They don’t have a clue how to put a halt on those spending habits. If you’re one of them, this behaviour might be doing more harm than good to you and your budget.
Make a note every time you spend - either in your phone or your diary. Avoid buying unnecessary items or postpone the purchase for some time. You can also prioritise your needs and wants and make decisions accordingly. Set a credit card limit. Make purchases through discount deals or coupons or at retail shops. This way, you can save some money and limit your expenses.
Problem 4: No Room for Family Members
Are you the one who is managing finances at home? Doing quite well in sorting out family expenses but your partner has some other plans? They don’t follow the budget. Neither your kids. This might lead to waste of efforts and time, let alone the disappointment that comes along with the budget failure.
Involve your partner, friends and family in your budgeting ideas. Make them aware of expenses. Make them realise the importance of controlling expenses. Categorise each and every member of the family as the spenders and savers. Work out on a spreadsheet and note down all the cash inflows and outflows. Analyse on a weekly or monthly basis. And within no time you will start seeing the results. Remember, “Food tastes better when you cook with your family.”
Problem 5: No Set Objective
If you think you’re doing well enough and ask yourself “What’s the need to save?”, you are taking a huge risk. Life is unpredictable. You never know what might happen the next moment. What if out of nowhere some medical emergency arises or a financial crunch comes up? You are going to suffer if you don’t manage your money well.
You need a budget and plan for everything; be it owning a house, a luxury car, an international trip or medical emergency. Set some monthly or yearly targets and achieve your goals one by one. Invest the surplus amount to gain good returns. Practice SMART goals technique: Specific, Measurable, Attainable, Realistic and Timely. Your efforts will surely pay off if you stick to the basics.
Finding an appropriate budgeting method might seem like an impossible task. What works for someone else does not work out for you. It can be frustrating in the beginning. However, over time, a simplified yet flexible budget can help you play with your money safely. Adopt a budgeting tool which makes your life better, happier, and more productive.
To successfully achieve your budgeting goals, all you need to do is stick to your modesty, keep your needs over your wants, control spending habits, increase your income, etc. And yes, don’t forget to save! Want to know the easiest way to save (and grow) your money everyday? Automate it through the Jar app. Jar lets you save your spare change from online transactions and invests it into Digital Gold - automatically. You can also set a daily amount to be deducted from your account or invest your money manually. Read more here. Download the Jar app now.