You've created a budget for you and your family, but for some reason, it just doesn't seem to be working for you. Each month, something comes up to ruin your budget, and you either go into debt or drastically have to cut another budget line item to make it work.
While you do have to be a little flexible on your budget, since you may occasionally have categories where you spend more and categories where you spend less, you don't want your budget to be a disaster every month. Otherwise, you'll likely throw up your hands and state that you knew a budget wouldn't work for you!
If this is the case, there are likely several reasons why your budget isn't working for you:
Your Budget is Unrealistic
When you create a budget, it's best if you examine your actual spending over a period of time before you create the budget. That way you have an idea of how much you're spending on each category. Rather than just stating that our family of 4 (including tween boys who can eat) only needs $40 per week for our grocery budget, watch how much you're actually spending and how much you need to budget.
You likely can reduce the amount you're spending on food if you're spending hundreds each week, but something like $100 a week might work better. It just depends on your family and your circumstances, but you need to be realistic on how much you need to spend or it won't work. You'll just end up going into debt or constantly borrowing from other budget categories each month.
If at all possible, you don't want your budget to be so tight that you never have any room for splurges. However, you might need to think about splurges in a different way by finding ways to splurge at home with DIY solutions.
You Don't have an Emergency Fund
If you don't have at least a minimal emergency fund, whenever an unexpected expense comes up, you have to blow your budget to pay for it. Make sure you have at the very minimum $1,000 saved in an emergency fund that you can use for true emergencies (like a car repair, etc.). That way, you can use the emergency fund to pay for emergencies rather than money budgeted for something else (like food). Once you spend money from your emergency fund, be sure to budget some money each month to build your fund back up again.
You Don't Account for Irregular Expenses
It's easy to remember to budget for rent/mortgage, food, etc. each month. But what about those expenses that you only pay quarterly, semi-annually, or annually? Did you remember to budget for those also? For example, even if you only pay your auto insurance annually, remember to break it down monthly and send a budgeted amount to savings each month so that you have the money on hand to pay in cash when your bill is due. Otherwise, you'll have to scramble around trying to find the money every year.
You don't have the Self-Discipline to Stop Spending
When your friends ask you go out for dinner, it can be hard to think about your budget and say no if you've already spent all your Dining Out budget for the month. It's up to you to keep on track of your budget and stop spending when you've spent all the money in a category. You might find it easier to use cash envelopes for each category since you can immediately see how much money you have left just by the amount of cash left.
And, a tight budget doesn't have to ruin all your fun. In the friend scenario above, you could invite them to come over for dinner or have a game night where you serve appetizers or dessert. In the end, you're still having fun with friends.
If you have a budget category that seems to mess you up every month (in my case it's dining out), you can plan ahead to help yourself be more successful with your spending. In the case of dining out, it works better for me if I have a meal plan and shop once a week. That way, I know what we're eating and am not tempted to eat out.
What about you? What's the hardest part for you about staying on budget? Do you ever fail and what's your biggest reason?
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