You created a budget, but you’re still struggling. Wasn’t a budget supposed to fix your financial problems? Why isn’t it working?
There are a number of reasons a budget may not be working. It may be the way you’re living or that you’re not focused. Let’s take a closer look at the reasons your budget may not be working.
You’re Living Above Your Means
You’re in the right neighborhood, have a shiny new car, and your kids always wear name brand clothing to school. Unfortunately, there’s never enough money to cover all those expenses.
This is because you’re living above your means. Chances are more money is going out than is coming in. Sit down and reevaluate your budget. Can you really afford to keep living this way? If not, it’s time to make some changes.
There Are More Bills Than Income
Even if you’re not living an extravagant lifestyle, you may still have more bills than income. This is especially true if there was a recent loss of income, such as the unemployment of you or your spouse.
When you find yourself in this situation, you need to make some cuts so that you can live on the income you do have. This can sometimes be hard, but there’s always something that can be cut.
You’re Not Budgeting in Fun
In some cases, people are paying all their bills and putting lots of money into savings. Unfortunately, they aren’t allowing any money for splurges and entertainment.
Part of your income needs to be delegated to flexible spending. This money is to be used for fun. You might spend the money on going to the movies or buying a new pair of shoes.
Either way, you need to budget a small amount for fun so that it doesn’t feel as if you’re working for nothing.
The Budget Isn’t Realistic
Some people want to make their budget work so much that they set unrealistic limits. For example, a mother of a family of six may budget $200 for groceries each month. There’s no way that’s going to work.
You need to be realistic in your budget. If you’re not sure how much to budget, track your expenses for at least two months.
You’re Not Focused
Last, but not least, your budget may not be working because you’re not focused. People often make the mistake of trying to build a savings account while paying off debt or trying to build multiple savings accounts at once.
You need to focus on one thing and get that done before moving on to the next thing. For example, if you have debt, put all your money towards getting out of debt before you focus on saving money for a vacation.
A budget is a great way to become financially responsible. However, there are little hiccups that can prevent your budget from working. Thankfully, these can be avoided.