Simple ways to get your budget back on track
You are not giving yourself grace
There are many reasons that you may be failing at budgeting but the number one reason that people fail in their budgeting efforts is that they are too hard on themselves. Many people treat budgets like a static object. Thinking that once the budget has been built, they are done. But by the sixth-week things start to crumble. This happens because no two months are the same. Each month comes with its own unique expenses due to holidays, family obligations, travel, etc.
Budgets are living things. They require maintenance and care. Hard work is done at the beginning then you can easily manage your budget in about 30 minutes per week. This time allows you to review your spending and make sure that you are still moving towards your goals. This weekly review also helps you avoid surprise expenses because you are tracking your bills more closely. Let’s tackle the top 6 reasons you may be failing at budgeting and how you can fix it.
You aren’t tracking your expenses
No budget will succeed without tracking how much you are spending each month. A recent study found that 59% of the respondents don’t track their spending. Tracking expenses can seem tedious but it is the most important part of the budgeting process. This is also one of the top habits that keeps people from sticking to their budgets.
There are two methods that you can use to track your expenses manual or automated. The manual process of tracking your spending requires you to write down your expenses. You can do this with a simple notebook and pen or you can use my printable Budget Blueprint budget planner.
If you choose the automated budget tracking route then a great free resource for that is Mint. This program allows you to connect your bank accounts and credit cards. The automated process of tracking your expenses allows you to simply need to review the transactions weekly to stay on top of your spending and budget.
You aren’t planning for annual expenses
Nothing derails your budget faster than that annual fee coming out of your account unexpectedly. Not tracking your annual expenses will through you off track every time. Some common annual fees are for things like Amazon Prime, fitness programs, subscriptions, insurance, or events for the kids.
The best way to keep these items top of mind is to add them to your budget ahead of time. If you know that Amazon Prime will renew in June, build that payment into your monthly budget. Create a savings account to keep the money in until it is needed then deposit money regularly. Set a calendar reminder on your phone, computer, or budgeting software to remind you 30 and 7 days in advance so that you are not caught off guard.
You don’t have an emergency fund
Life happens when you are busy making plans and this is never more true than with your budget. Having emergency savings will help you avoid the stress and potential debt of unexpected expenses. Having a beginner emergency fund of 3 months of living expenses is critical to helping you stick to your budget. It can be quite daunting to think about saving between three to ten thousand dollars. Especially if you have not ever saved more than a few hundred at a time.
If this is you I encourage you to save steadily even if you have a tight budget. One way to make saving fun is by participating in free savings challenges like my 2021 Savings Challenge or the $5 Dollar Savings Challenge. Making a game out of tracking your savings will increase the likelihood that you will actually stick with it. If you’d like to increase your chances even further, invite a friend to join you, and keep each other accountable.
You aren’t using sinking funds
A sinking fund is defined as a targeted savings account that you use for a specific financial goal. Earlier we discussed putting money away for annual expenses and this is where the sinking funds come into play. This account is different than an emergency fund because it’s sole purpose is to spend it by a predetermined date. For example, if you have a sinking fund for a home improvement project that you have scheduled for the fall, you would add money into that account until you reach the date for your projects to begin. You are then able to withdraw that money, as needed without disturbing your monthly budget.
When setting up sinking funds check use fee-free savings accounts. I recommend online banks like Capital One 360 or Ally Bank. They offer free savings accounts with higher interest rates than brick and mortar banks. You can link these accounts to your current bank and automate your savings between the accounts to keep you on track for hitting your savings goals. Track your sinking funds progress with this free Sinking Funds tracking sheet.
You aren’t budgeting for fun
When people are attempting to plan their budgets the first thing that they usually cut is the things that bring them joy and make life bearable. Do you like getting manicures, going to the movies, or getting a tasty latte? While these things are not what is keeping you from becoming a millionaire, they will through your budget off-kilter if you do not plan for them. Self-care is not just a trendy catchphrase it is a necessity. A recent survey found that 53% of Americans believe that self-care is important for well-being yet most people don’t add it to their budgets. It is no wonder that people’s budgets are blown by those unplanned Starbucks trips or the movie rentals we’ve been racking up during the pandemic.
The best way to protect your budget while actually enjoying your life is to add those line items to your monthly spending. If you are trying to reduce spending reduce your weekly latte trips by half or extend your manicures to every 3 weeks instead of weekly. These small budget shifts will allow you to enjoy the comforts of activities that bring you joy while keeping your spending in check.
Share your goals
You can decrease your odds of failing at budgeting by following the six steps we outlined above like automating your processes with technology or manually tracking your goals. However, if you want to supercharge your efforts, share your goals with a trusted person. You improve your chances of sticking to your goals by 95% when you share your plans with someone else. You may let yourself off the hook, but you will usually stick it out much longer when you know that someone else is rooting for you. If you would prefer to not share your money goals with a friend, then there are lots of online personal finance communities that provide community and support. Find one that resonates with you and get to work.