Three Reasons Your Budget Could Fail and How to Avoid It

A budget is an excellent first step to getting your finances under control. However, just setting up a budget does not guarantee your financial situation will improve. You need to be able and willing to follow it. A budget can fail for many reasons. These are the most common reasons why a budget may fail and what you can do about them.

1) The budget is too low.

It is easy to create a budget that looks great. You can save hundreds of dollars per month and become debt-free in a year or less. It’s great, as long as you can realistically see the numbers!

Unrealistic numbers are the worst thing that you can do when creating your budget. This is easy to do accidentally. You can now see how expensive certain expenses are or you can even eliminate some expenses altogether because they are “uncommon”, but it’s possible for wishful thinking to sneak in. It is obvious that a budget that is unrealistic is not possible to work. You will reap the benefits of the budget if you take the time to ensure it represents reality, even if it is a bad one.

2) The budget does not have buy-in.

Setting a budget is not something you should do if you are living alone. If you are with a spouse or family member, you shouldn’t suddenly say that you can’t spend $X now. You’ll probably get an argument. Your partner/family will start to resent the new budget that you have forced upon them. They may even try to ignore it or undermine it.

It is important to get the support of your family members when you create your budget. Everyone should be involved in reviewing the numbers and deciding how much money each area can receive. When people understand the whole situation, they’ll realize that you aren’t just trying to cut them off or ruin their fun. Everyone can come together to improve the financial situation.

3) Your budget is too tight to allow for fun.

It’s easy to look at every penny you spend when creating a budget. This will allow you to identify any items that are either “fun” or luxury. Although this may make your budget look great, it can end up being a loss. Your budget will quickly become a burden. It is easy to spend extra money on things you don’t need, even though they aren’t included in your budget. You can then fall into the trap of not paying attention to other areas because they aren’t in your budget.

You can make sure that your budget includes money for fun. You need to make sure that you have money set aside for fun, whether it is money to eat out, money to see the movies, or money you can shop guilt-free. This amount must be established like any other budget item. Once you have set it, you must keep it.

You now know the most common reasons a budget could fail. This will help you to prevent it from happening to you. The first step to gaining control over your finances is a budget. Avoid these common mistakes and use it wisely to reap the benefits.

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