Three Reasons Your Budgeting Is Failing
Do any of these resonate with you?
Mindset
One of the hardest things for me to change was my mindset. That’s why I observe numerous people failing as well. People teach us that budgets are all about sacrifice, not their true intent. Let’s take a step back for just a moment. In the marketing world, fear sells, and I can prove it.
You will want to buy our pet insurance because your pet might need life-saving surgery, and we will cover 100 percent of the cost once you meet your deductible. What are they really selling? Fear, fear that you might lose your pet. In 40-plus years of pet ownership, I’ve had to employ major medical twice. Once for a dog that got tangled in a barbed wire fence, and once for internal surgery. They are banking on is that you’ll never have to use what you’re paying for. That way, it’s nothing but profit for them.
Why not make it a profit for you? Open up an interest-bearing savings account and put the premiums in that. You’ll be able to watch your money grow versus giving it to a company that could potentially deny your pet’s medical needs. It happens in people’s insurance, so why not pet insurance? The next time you see an ad, ask yourself what they are actually peddling.
Our product will help diminish the appearance of wrinkles. They are selling the fear of aging. You get the idea.
Now, back to the subject at hand. I had my first breakthrough when I quit listening to the fear sales tactics. If you don’t use a budget, you’ll never get out of debt. To budget correctly, you have to make sacrifices. If you really want to get ahead, you’ll eat beans and rice three times a week. We’ve all heard the “Things you must do, and give up” speeches.
Were you just now nodding your head?
My first breakthrough was when I tossed Budget out the window. Not physically, but figuratively. The word budget has such a negative connotation for most people. Myself included. I tried frequently, but could never make it stick. That was until I had a mindset change. I removed word Budget from my vocabulary. Instead, it became my spending plan. That one “phrase change” started my mindset transformation. The spending plan was more about what I could do versus what I couldn’t do. It focused on what was important to me.
I’m not going to lie. Initially, it was challenging. If you’re living paycheck to paycheck, it will probably be tough. I’d be willing to bet that toughness is the reason you’re reading articles like this one.
I’m sure you’ve heard the expression… Pay yourself first if you want to get ahead. If you’re barely making ends meet, that advice is so far outside the realm of possibility, that it is laughable.
I also learned that a monthly budget never worked for me. I could never stick with it, and you had money from June that had to pay July bills. My next breakthrough came when I learned about paycheck budgeting. That made sense to me and has been something I have been able to stick with for years now.
It resonated with me so much that I ended up creating my own spreadsheet to facilitate my spending plan tracker (I will devote a future article solely to my Paycheck bill tracker — subscribe so you don’t miss it). On the spreadsheet, I have five major sections. At the top is your income. That rolls down into the monthly bills section (credit cards, vehicle, mortgage, etc.). The remaining money ends up in my savings account section (pay yourself second). After Savings, the remaining money rolls into the expenses section. If money is insanely tight, you might need to forgo the savings area and go straight into the expenses area. Under expenses, I have categories that are not a fixed bill. Things such as fuel, groceries, pets, dining out, and home goods like cleaning supplies. You could even simplify it even more by just listing store names. Maybe you use Walmart or Target for both food and home supplies. Or you use Chewy or Amazon for pet supplies. Set up your categories to suit your needs.
The last section is for debt reduction.
One of the biggest functions of my spreadsheet is its ability to show me the total money outlay for a section and the rest left from the paycheck for the next section. This allows me to spend my money on what’s important to me. Nowhere in my spending plan does it limit me to what I can do. My money may limit me, but I use it with intent for what is important to me.
My final mind-shift change was when I retired the “spending plan” nomenclature, and now I have created a complete “Financial Planning Workbook” for my finances.
A change in mindset might be all you need to succeed.
Knowledge
The second most important aspect of succeeding is knowledge. When I first started this journey, I didn’t know what I didn’t know. Over time, I acquired that knowledge either by making foolish mistakes (anyone familiar with credit card stupid tax?) or by being compelled to make a change.
Some of what I’m going to share may have you going… well, duh at your computer screen, but I have found that we sometimes get set in our ways and never think to increase our knowledge.
We have been customers of Progressive Insurance for over five years. I made a call to explore potential remedies for the excessive rate hikes, as neither of us has been involved in any accidents or received any tickets. He said the only way to get a rate reduction was to install one of their nanny devices in our vehicles. That will NEVER happen. So I started calling around. Some places were even higher. I called Nationwide to get a quote, and the guy said we are a broker for Progressive. Would you like a quote for them as well? I informed him I was leaving Progressive so it would be a waste of his time. We were paying $1,570 every six months for a 2005 and 2013 vehicle. Nationwide gave me a progressive quote of $639 for the same coverage and vehicles. Go ahead and let that sink in a little… I’ll wait.
That forced me to get a quote on our RV since it is also with Progressive. I ended up with better coverage for less money.
After about an hour of work on my part, we ended up with policies on our vehicles and RV for less than what we were paying for just the vehicles. That is a MAJOR win. It’s all about knowledge. Call your company and have them re-quote you if you are accident- and ticket-free.
We spent the last five years on the road living out of our RV. Over time, it got easier to purchase almost everything from Amazon versus finding the stores locally that carried everything we needed on a routine basis. In Sep of 2023, I purchased a Timex watch from Amazon, but they sent me a significantly cheaper knit cap instead. It took me two months of fighting with customer no service to get my money back for the watch. I canceled my Prime membership and haven’t shopped Amazon since. The benefit to me (other than the obvious cost savings) is that it forced me to find other suppliers for the things we needed. We have chemicals that we consistently use in our RV and need to be restocked every two and a half months. It was around $22 on Amazon with free Prime shipping. I found it at an RV supply website for $9.95 plus $5 shipping. Score.
I found a supplier for our vitamins (it sucks getting old) and the price was similar to Amazon. What blew me away was the speed at which they packed and shipped the products. I no longer waited a week for the shipped email. Depending on when the order was placed, they either shipped the same day or the next day. We had a similar experience with our pet supplies. Now we order from Chewy. The price is usually better than our local store, with the added benefit of it being delivered to our door. Bonus for not using gas to pick up pet supplies.
If you are serious about finding money, search every regularly used item. You might be surprised. This example also encompasses planning. On my way to the grocery store, I pass a Dollar General and a Menard's. The grocery store has my shampoo for $5.49 a bottle. Dollar General offers it for $5.00 a bottle. At Menard's it is $4.97 a bottle. While not an enormous difference from $5.49 to $4.97, what other items could I purchase there to increase my savings? I’m not making a special trip or going out of my way. I usually get stopped at the light in front of Menard's.
Planning
As you can see, a little planning can go a long way. If you pass by three or four stores, determine if you can save money by shopping at them for some of your purchases. Going back to the example above, 0.52 cents saved might not be worth it for you. By purchasing one every other month, you can save $3.12. If you purchase one a month now, you’ve saved $6.24 on one item over the course of the year. If you can 10x or 20x that savings, you are making great strides toward your financial freedom.
When I run my product calculations, I use the everyday price, not sales prices. I have a spreadsheet set up with the prices at each store, and I will update that sheet about every six months. When I am planning my shopping trips, I’ll then look at sale prices and see if they beat the everyday prices somewhere else.
Another thing I think about while I’m planning my shopping trip. Is it worth my time to save 0.50 cents? If I only have one item on a store’s list, I’m liable to just grab it at the second cheapest store.
If you’ve put in the effort to gain the knowledge, you will be better prepared for the planning aspect of your journey.
Using my financial planning workbook has put me leaps and bounds ahead in my financial journey. This article will hopefully get you thinking about your own journey. I’m planning more articles about everything I do with my financial planner workbook soon.
What changes have you made that have really helped you? Share in the comments below.
Disclaimer
This article is intended for informational purposes only, and should not be considered financial, investment, business, tax, or legal advice. You should consult a relevant professional before making any major decisions.
