Create a budget!
Three simple words.
Something every personal finance site advises.
In that case, it should be easy.
I can’t budget.
Three more simple words.
Something most people looking for money help say.
For some people, it’s like quitting smoking.
They try over and over and over again.
Sometimes it’ll stick for a while.
Mostly it’s without sustained success.
They’ll try this person’s spreadsheet.
They’ll try that person’s recommended budgeting app.
They’ll try basics like the envelope system.
Many people still fail to budget.
Some to the point of giving up entirely.
There are 4 simple reasons why you fail at budgeting your money.
You Don’t Want To Budget
There are tutorials on how to create a budget on a number of sites and people going into in-depth discussions on the benefits of budgets.
Of course, there are also tales of attempt after failed attempt leading to nothing but exacerbation and eventually giving up on the task entirely.
It may seem like the two aren’t connecting, but that’s far from the case.
The reason why people have trouble budgeting comes down to one reason…
You don’t want to!
Anyone can develop a budget.
If you have ever made a shopping list with a limit on, you have budgeted.
If you’ve ever planned a party with a set amount of money to spend (birthday, wedding, anniversary), you have budgeted.
All it really takes is the ability to read and write.
Making the budget, for the most part, is the easy step.
All it really entails is tracking all of your income and regular expenses.
You’re just writing down words and the numbers allocated to each one.
The income numbers come right from your paychecks if you are an employee, or from your accounting software if you are self-employed.
The expenses you can get right from your checkbook or bank/credit card statement, as most of them are recurring and generally the same.
That leaves the odds and ends–the entertainment and commuting, clothing, maintenance, etc.
It may be a little difficult at first, but these are the categories that you are going to be allocating estimates to so you don’t need to be exact with them.
So where is the part that people don’t want to do?
Sticking To A Budget Is Hard
Making the budget is easy.
It’s just numbers taken from the historical data that is your life.
Making the necessary lifestyle changes to stay within those budgeted amounts is where most people fail to follow through.
Where most people get tripped up is sticking to the allocations for spending.
They fail in adjusting their spending habits to stay within their budgeted amounts for certain expense categories.
The truth is, many people are unwilling to make the sacrifices to adapt and change the way they live and manage their money.
Don’t worry, you aren’t alone if this describes you.
Many of us are guilty of this.
We have all become accustomed to certain lifestyles, and change is not something that most people handle very well.
And it may not even be your own fault.
The reasons vary, but most typically include:
- The way they were brought up–either coming from money or from homes in which the parents lived beyond their means–never having a solid financial foundation
- The way they lived in their “bachelor/bachelorette” years–free-spending, not a care in the world–getting too used to it and not wanting to grow up
- The way they live now–worrying about keeping up appearances–worrying about what others think
Nobody wants to give up their new luxury vehicle for a used practical car.
Nobody wants to go from dining on lobster and filet mignon to hot dogs and canned beans.
Nobody wants to go from staying at the Ritz Carlton to the Holiday Inn on vacations or even cutting them out completely.
Unless you’re serious about changing your money habits that is!
If you really want to change for the better you’ll do those “unthinkables”.
You Can Budget When You Want
I present to you: Black Friday & Red Thursday.
Imagine, if you will if everyone put even a fraction of the energy and dedication into planning everyday finances as they do when going into these two shopping days.
How many people would be in a lot less trouble than they are today?
Just think of the people you know personally.
Like managing finances, this huge shopping event takes planning, which begs the question:
Why can people plan for Black Friday but claim to be unable to plan and budget their normal finances?
It takes time to plan the schedule for the day of shopping:
- Coordinating schedules
- Finding someone to watch the kids
- Planning out the travel and shopping routes
- Figuring out which are the best places and arranging the day accordingly.
It takes commitment to sit out in front of a store for hours or even days to ensure getting the best deals.
Heck, it takes a crazy amount of patience and commitment to wait on those checkout lines!
Now if that kind of time and dedication was put into setting up and following a budget for things like…
- Saving for a college education
- Saving for retirement
- Building up a savings/emergency account
- paying down debt
…many people would be in a much better position than they are right now.
Even the holiday shopping season would be easier if more time and effort were used for planning and budgeting for it.
Higher-yielding online savings accounts or even CDs could provide a buffer and interest earned can be used to offset some of the costs.
Store loyalty programs can be used to gain even more savings.
Truth be told, many people are perfectly capable of making sacrifices in order to reach what they claim to be their “goals”.
Unfortunately, as evidenced by the amount of time and effort that goes into planning and budgeting for Black Friday, people are simply too lazy or just do not care enough to commit the same type of effort into their everyday finances.
Budgeting Isn’t Sexy Or Exciting
Some people can’t get into things which don’t excite or entertain them.
Budgeting is far from sexy (Even though I know a certain blogger who would disagree hahaha).
It’s far from exciting.
It’s not going to keep the every-person’s attention for very long–sorry money nerds, it’s true that it’s mostly you who enjoy and get goosebumps for budgets and spreadsheets!
But then you have something like fantasy football or fantasy baseball.
That shit is nuts!
You have people with whiteboards, and printouts, and calculations.
They sit for hours just talking about it.
All just to put together a make-believe sports team.
But guess what?
That’s exactly what budgeting is my friends!
Fantasy sports is spending trying to figure out the best way to spend your salary cap money across multiple positions.
THAT IS EXACTLY WHAT YOU DO WHEN BUDGETING YOUR HOUSEHOLD MONEY!
- Salary cap = total monthly income
- Positions/players = household expenses
It is literally the same exact thing just in a form that matches something you enjoy, but the same nonetheless.
So if you participate in fantasy sports with salary cap limitations, then you have absolutely zero excuses for not being able to make a budget for your real money.
Perhaps It’s Psychological
It’s difficult to find areas to cut back on when you are so used to–and comfortable with–how you were previously spending your money.
Wants often times get confused with needs when you’re used to living a certain way.
It can be difficult to break long-standing habits or learn the proper way to do things when you’ve been doing them wrong for so long.
Sometimes it’s easier to simply throw in the towel and give up because it’s too difficult to change.
That is just an excuse.
It’s certainly not a reason for why you cannot execute a budget.
Again, we’ve all been there before.
Sometimes it is necessary to throw everything we thought we knew out the window and start learning how to handle money all over again, the right way.
Or, you can just keep living your life the way you have been, never making any headway and never getting ahead.
Do you have a strict, detailed budget that you stick to religiously? Do you just have an idea in your head of what your budget is? Do you even know where you spent your last dollar!? Share your techniques and preferences below.