The Challenge Of Personal Budgets

It doesn’t matter how old you are. Everyone likes to have things “their way.” And hearing the word “no” stinks. Imagine, then, the problems that can arise when you are the one having to say “no” to yourself.” “No, it will not kill you to eat another brown bagged lunch.” “No, those adorable Jimmy Choo’s did not tell you to buy them.” And, “no, a pedicure is not a necessity.”

Setting and sticking to a budget may seem like an impossible task fraught with insurmountable obstacles—and a great deal of talking to yourself—but it can be done. It’s all about foreseeing the challenges before they arise and formulating a plan to conquer them.

You’re not 100% onboard.

No one can institute a big change—like following a budget—if they cannot see and relate to the benefits. That’s why it is important to align your budget with your own personal goals. It is hard to feel personally aligned to an abstract goal like creating a “financial cushion.” Instead, make sure that your goals are divided into smaller, quantifiable steps like “amass $500 in my emergency fund.”

And, here’s the motivator. Once a practical goal like this is achieved, provide yourself with an affordable reward—like that pedicure that you’ve been denying yourself.

Investopedia’s “Budgeting Basics: Goal Setting” warns that if all your savings are going towards dreary activities like paying off debt and saving for unexpected bills, your only incentive to save might be fear of what will happen if you don’t. They recommend incorporating some rewards into your savings plan, itself. For instance, if you long to travel, you may wish to start a vacation fund in addition to your other savings commitments.

Surprise expenses sabotage your efforts.

A common obstacle to budgets is the large, unexpected expense. The unwelcomed surprise. Dental emergencies, car repairs, and veterinary bills have been known to send some novice budgeters into a tailspin, but the truth is that these very incidents are actually proof of the importance of budgeting.

You’ve likely heard of the six month rule—everyone should have at least six months worth of living expenses stashed away in case of emergency. All budgets should strive to create this monetary cushion. In Yahoo.com’s “5 Reasons Budgets Fail—and What to do About Them,” Professor of Business Leadership at New York University’s Stern School of Business, Vicki Morwitz, states, “people feel quite confident about what their expenses are for a given month and don’t think about unexpected expenses, which they do factor in if they’re budgeting for a longer period.” Don’t fall into this trap. Be sure to factor surprise expenses into your short-term monthly budget.

Your spouse doesn’t “get it.”

If you’re spouse doesn’t buy in to the whole “budgeting” thing, you are going to have to engage in an open and frank discussion. Perhaps, they are unable to see how following a budget can benefit them—see problem # 1 above. By asking them about their goals—both long term and short term—you will be able to align the budget with what’s important to them as well. As “Overcoming the Common Challenges of Budgeting” states, “if they see that their dreams are going to be propelled forward by your goal of setting and living by a budget, they will be more likely to not only participate, but contribute.”

And, rather than focussing on the word “no,” try to accentuate the positives—the things that you can now say “yes” to. Yes, you know how much you can afford to spend at any given time. Yes, you have accumulated a six-month financial cushion. And, yes, thanks to your “vacation fund,” you can now take your dream holiday. Bon Voyage!

If you need help getting started on your new budget, check out “Free Budget Template: Easily Track Your Finances” for a user-friendly budgeting template.