Do you find it hard to make a budget? If you ever get around to it, downloading a template or creating one in Excel, then it requires tremendous will-power to complete the task. Chances are that you will soon come to the conclusion that having a budget does not work for you.
Why do we find budgeting such a challenge?
It’s not the technical aspects of creating a budget. If you don’t want to mess with a spreadsheet or use an app, you can always buy a book with budget sheets. It’s not the scheduling aspects of it, either. If you set aside an hour a week, you can easily update your income and expenses. It’s something else entirely. It’s the psychological aspect of budgeting.
The most common complaint people have about maintaining a budget is that the nit-picky process doesn’t work for them. Tracking all their expenses makes them a bit uncomfortable. Since they find it hard to stick to their budget, they keep failing at it.
Before discussing how to stop failing at budgets, let’s pause to consider why budgeting matters in the first place.
Why Budget at All?
Budgeting is no more difficult than scheduling things in a calendar or keeping a running to-do list. These are immensely useful tools. When you can keep your schedule up to date, you know where to go and when to be there. As a result, you don’t disappoint people. When you create a to-do list, you know what things should be done by priority. As a result, you get a lot of important tasks done.
Budgeting is no less useful it allows you to spend within your income range. Consequently, you don’t run out of money for important things like buying groceries, paying the rent, or renewing your car insurance SR22 if you’ve had a DUI that puts your right to drive at risk. In other words, you won’t run out of money to eat, have a roof over your head, or get into trouble with the law because you have enough money to cover all these critical expenses.
One can even argue that sticking to a budget is essential for avoiding situations that create angst and chaos from occurring.
3 Ways to Stop Failing at Keeping a Budget
Now that you understand that budgets serve an indispensable role in managing your life, let’s take a look at 3 ways to stick to your budget.
1. You need a strong why to pay attention to your budget.
The reasons budgets collapse is not due to a failure in mathematical skills. You can always use a calculator. They collapse because of neglect. You don’t care enough to keep your budget updated and gradually slip so far behind that it’s easier to create a new budget than try to catch up.
When looking for reasons, there are good reasons and realistic reasons.
A good reason is that you will become a better steward of money, and this habit may lead to financial independence. It’s a good reason, but it’s so vague that it’s almost an abstraction.
However, a realistic reason is that you have to spend less than you earn to stay solvent. Once you start falling behind on tasks like paying off your credit card balance or incurring late fees on your phone and utility bills, you are on a downward spiral. You now spend more money than you need to cope with unnecessary expense like high-interest fees and penalty fees. In the long run, you are also ruining your credit score.
2. You should tie budgeting with a long-term goal.
Why do you want to be good at handling your money? It’s because you can enjoy all the benefits of financial success from living in a nice car to driving a modern car, from eating high-quality foods to going on vacation, and from investing in good clothes to investing in an education that will further your career. Perhaps, you want to be “comfortable.” Perhaps, you want to be debt free. Perhaps, you want to have financial independence and make work an option rather than a necessity. The reason has to be something that resonates with you.
3. You should understand that budgeting is about drawing boundaries.
Boundaries can be helpful. They can be helpful in a relationship with your boss or your spouse or your friends. They prevent people from encroaching on more of your time and attention than you can manage. Once your boundaries are crossed, you feel stressed because you’ve overextended your time, energy, or comfort level. Similarly, when you have boundaries for your spending, you don’t splurge when shopping at Target, don’t snap up 4th of July sale offers because they are at an all-time discount, and don’t buy a Starbucks purple, green, orange, blue or pink drink because it’s the latest craze. In other words, you don’t react to Pavlovian stimuli but evaluate your response.
Boundaries are not always about drawing limits, either. You may find that you have surplus money. You can categorize this as play money and take the kids to that movie that just came out. You don’t always have to do things on the cheap because you’ve got your major expenses covered for the month.
When budgets fail, it’s only because you don’t have a strong enough reason why to stick to them. When you know your reasons why, when you know your long-term financial goals, and when you know your spending boundaries, keeping a budget can be empowering.