10 Reasons Budgets Fail

You’ve tried budgeting. But it just hasn’t worked. Is it you . . . or the budgeting tool? Why isn’t this working for you? This article takes a look at ten reasons why you might have flopped on your budgeting efforts. If you can dissect why something fails, then you can fix it, right? Let’s dive in.

If you go into any task with a lousy mindset, one that’s already geared for failure, you’re not going to be successful. You’ve entered the circle of self-fulfilling prophecies. You tell yourself that you suck at math, that you just don’t have the smarts or discipline to budget. So you put in a half-hearted effort, and you fail — again.

>> Change your mindset. You don’t have to be a mathematician to set a budget. And if your previous efforts failed, chalk it up to a learning experience. Don’t give up! You CAN budget!

Economic status has an impact on our knowledge of money, and our ability to budget. While plenty of people claim that they don’t make enough money to keep up with expenses, those who live at and below the poverty line have real struggles. In Maslow’s hierarchy of needs, our first need is physiological — the need to survive. If you are one step away from homelessness and you struggle to pay for groceries because your income is low, it’s hard to think about getting ahead. You’re surviving. And if you don’t have access to a bank account, you might not even have the tools, like your bank’s budgeting app, that would help you with a budget.

>> Give yourself a break. If you’re barely getting by, a budget can help. But if you are feeling desperate and you can’t bring yourself to creating a budget, it’s okay. Keep moving forward. Educate yourself. Get that income growing. Set up a budget when you’re past survival mode.

There can be a big divide between intention and action. The most challenging part of the budgeting process is starting. You’ve got to record your numbers, create categories, and set goals. But once you’ve got your budget set up, it doesn’t take long to update and tweak it. Nevertheless, if you don’t designate a specific day and time to play with your budget, it doesn’t get done.

>> Schedule a Date in your Calendar. Set a day and time of the week in which you will devote 15 minutes to your budget. Once you’ve got things grooving, that’s all you’ll need. Make it Money Monday, Finance Friday, or Savings Saturday. Make a date with your budget.

So you figured out a budget in your head, without looking at your actual expenses. And then, you discover that your way over your budget. What are some of the “hidden” expenses you neglected to include in your budget? Is it those daily coffee runs and happy hours? Or maybe it’s those dining out bills that swallow your budget? So you stop budgeting, because it’s “not working.”

>> Base your Budget on Actual Expenses. Write down all of your expenses from last month, by category. If you really want to get ahead, label your purchases as a “Want” or a “Need.” Be honest with yourself. Then write down budget amounts that make sense to you.

It’s easy to put budgeting on the “back burner” after you’ve been slammed with some major expenses. Maybe the car needed work, or you had to rush your cat to the vet, or an unexpected bill arrived at your doorstep. You feel defeated. What’s the point? So you give up on budgeting.

>> Budget in Emergency Savings. Do you budget in your savings? If not, do it now. Put money aside every month for emergency savings. When that’s at a level you can live with, start saving for those other expenses that come up, like car maintenance. You can dip into your savings accounts for unexpected expenses, and it won’t mess up your budget.

There are so many budgeting tools, from spreadsheets to budgeting software to apps. Maybe you haven’t found the right tool? Some of the apps even turn budgeting and saving into a game. Maybe that’s a good fit for you? Or maybe you’d do amazing things with a simple spreadsheet? Maybe it’s your tool that is failing you.

>> Get the Tool that Matches your Personality. There is no “one size fits all” when it comes to budgeting. When you know your Budget Personality, you can find the tool that best works for you. Want to know more? You can download my Budget Toolkit, which features five personalities, here.

If you are keeping a budget for one, you have control over your spending. But if you’re keeping the family budget, it might not be so easy. Maybe your partner is a spender and you’re a saver. Or the children don’t understand why they can’t have the latest thing, and it’s easier to give in than to argue about money. You feel like the “meanie,” and the “enforcer,” and it’s not a great place to be.

>> Make it a Family Event. I have a friend with two children, and they use a whiteboard to add things they’d like. Mom says, “add it to the list and we’ll see if it fits into the budget.” So the children add fun things, like a pony, or a ride on a space ship. Those fun items are mixed in with a new pair of shoes. Every month, as a family, they make choices that fit with the budget. It’s fun!

You started a budget, and you watch your money come and go. You didn’t really set up a budget based on your priorities and goals. So you keep spending on whatever you feel like, and every month, it’s the same old story. Why budget at all? So you stop.

>> Set Priorities. Budgets are aspirational. They are not perfect, especially when you’re starting. Give yourself a break when things don’t line up the way you wanted. How do you want to be spending your money? Are there things you can cut out altogether — like that gym membership and subscriptions that don’t get used? List your priorities (including saving). Get yourself a “win” by funding your priorities, and cutting out the things that don’t matter to you.

Spending should be a mindful and intentional activity. But all too often, our spending is a habit. This is especially true with “retail therapy.” Did you have a bad day? Maybe it’s time to treat yourself — so you hang out with your wine and Amazon. Or you tend to go grocery shopping when you’re hungry and fill up your cart with junk. Those are the things that can break your budget.

>> Change the Habit Loop. You can change your habits. It might be challenging, but you can do it. Think about the habit loop — the trigger, the routine, the reward — and swap out shopping for something else. If you an emotional shopper, add an item to your cart, but DON’T BUY IT! Let it sit in the cart for 24 hours. Then decide if it’s really something you want. Spending too much on groceries? Shop after you’ve eaten, and bring a list. Dissect your habits and take charge of your spending.

When people think about budgets, they think about cutting expenses. How fun is that? If you create a budget that is based on deprivation, it’s going to fail. Where are your rewards? It might be admirable to eliminate all those fancy coffee drinks from your budget. But if you start feeling deprived, your budget is going to fail.

>> Don’t Eliminate — Limit. You don’t need to eliminate all restaurant meals, or new shoes, or that fancy coffee from your budget. Just treat those items as rewards. Celebrate the end of the week with the fancy coffee. Get the new pair of shoes after you’ve filled up your emergency savings account. Have a special dinner out in honor of the full moon. Use your imagination to set limits.

Heads Up: This is the last week of Budget Love month in the Gutsy Women Finances community. Join us in March for Million Dollar March. Sign up for the Wealth Builders Program to calculate your net worth and toy with numbers to reach $1,000,000.