Is it impossible for you to budget and save for expenses, no matter how far in advance you know about them? Does the word “budget” give you a sinking feeling in the pit of your stomach?
If the answer’s yes, you’re not alone. A 2019 Debt.com poll found that only 67% of American households prepare a monthly budget.
The good news is there’s a budgeting system out there that will work for you — even if you’re not good with numbers or saving money. There are as many ways to budget as there are types of spenders. However, the first step to figuring out the right one for you is knowing some of the main reasons budgets fail and how to avoid the most common pitfalls that can lead to frustration and failure.
Why Your Budget Is Failing – Solutions
1. It’s Not Realistic
If you’ve ever abandoned a new diet just days after starting because the only thing you could eat were carrot sticks, you understand the futility of an overly restrictive and unrealistic plan. Similarly, many budgets leave no wiggle room, making them impossible to follow for any length of time. If you’re starting with zero savings and no budget at all, it’s not realistic to expect yourself to completely overhaul your spending and eliminate any impulse purchases or unexpected expenses in a month’s time.
One of the main pitfalls for people who abandon budgets is going from no budget at all to trying to cut spending dramatically and setting impossible goals. If you set yourself up for failure, that’s precisely what you’re going to get.
Find the budgeting method that works best for you and your family. At the very least, you should track your spending each month through an app like Tiller. If you find that you’re already spending most of what you earn on living expenses and other needs, saving 50% of your income isn’t attainable. Instead, pick targets within your reach.
For example, cut back from eating out three times a week to only twice. Instead of going out to the movies, take advantage of your public library’s free resources and check out DVDs instead. You can always change your budget in the future as your spending habits and savings needs change.
2. You Don’t Know Why It Doesn’t Work
If you don’t understand the reasons your budget keeps failing, you’re never going to find one that works for you. Knowing what about your current system or those you’ve abandoned in the past has tripped you up can help you figure out what can help you succeed in the future.
Pay attention to the feelings you have when you think about your budget. Are you ignoring it because you hate spreadsheets? Ditch the spreadsheets in favor of something less byzantine, like a service such as MoneyPatrol or Pocketsmith that automates budgeting for you. If technology’s not your thing, try the envelope budgeting system.
If you think budgeting is boring and lose interest quickly, brainstorm ways to make it more fun. For example, turn it into a game. Think of staying on track like the thrill of maintaining a winning streak in your favorite sport.
If you’re not sure which method is best, try a few before settling on one or deciding budgeting doesn’t work for you.
3. You Don’t Know Your Spending Style or Triggers
If you don’t know what you splurge the most on or what types of situations make you throw caution to the wind, you can’t choose a budget that fits your style. For example, if you almost always stick to your grocery list but can’t stroll past a clothing store without ducking in “just to look” and then strutting out $50 poorer, your grocery budget probably isn’t your most significant problem area.
Knowing both your triggers and strengths can help you find a no-fail strategy that works for you. Pay attention to your spending style. Do you find it easy to say no to buying stuff for yourself but love to spoil your kids? Or perhaps you’re an emotional shopper who turns to retail therapy after a hard day.
I’m much more likely to shell out cash on impulse purchases when I’m clothes shopping without a clear plan of what I need to buy. I’m very susceptible to the lure of good deals and “limited-time-only” sales. So I never walk into a clothing store without a specific list of the things I’m going to buy there. If it’s not on the list, even if it’s a good deal, I don’t allow myself to buy it.
If you know your spending style, you can identify your challenge areas and use some strategies to help keep your budget under control.
4. Your Partner, Family, & Friends Aren’t on Board
If you’re trying to make and stick to a budget but the other people in your household aren’t willing or even aware of your efforts, they could unintentionally sabotage you. Think about your past attempts at budgeting. Does your partner scoff at trying to save money? Are your roommates encouraging you to splurge when you want to be saving?
The people we spend time with influence our spending habits for better or worse. If those closest to you aren’t on board with your budget strategy, you’ll probably have a harder time staying with it for the long haul.
The solution here depends on who’s being the bad influence.
Before imposing yet another budgeting strategy on your partner or family, talk with them about your short- and long-term goals. Would you like to buy a house soon, travel more, or have the time to learn a new language? Your goals don’t have to be budget goals — simply things in your life you’d change given the opportunity. Once you’ve identified them, think about how having more control over your budget — and thus, more money at your disposal — can help you accomplish those goals.
For example, if you’d like to have more free time to pursue hobbies, sticking to a budget and saving money means you don’t have to work as much and can make more time to pursue other interests. If you’re thinking of starting a family but can’t fathom affording the baby-related expenses, getting your budget under control helps you financially prepare. If you can figure out a way to convey to your loved ones how sticking to a budget offers more options rather than less, you can finally get everyone on the same page.
If your roommates or friends are a bad influence on your spending, it’s possible they just don’t know you’re trying to budget or cut back. Once you open a dialogue, you might find that they’re understanding or even in a similar situation.
5. It Doesn’t Fit Your Lifestyle
If you’ve budgeted 30% of your take-home pay on housing but live in an area with a high cost of living, adjust the categories and make your budget work for you, not the other way around. You also have to choose a budget with categories that fit your lifestyle.
For example, if you download a spreadsheet from the Internet that’s filled with columns like “property taxes” and “car payment,” and you don’t own a house or a car, you could succumb to temptation to spend that money instead of saving in those categories because the budget doesn’t feel like yours.
Tailor your budget to your current spending categories, and then look for places to edit and reduce spending. For instance, if you’re putting more than the recommended 20% of your budget toward paying down your student loans because you have a goal to be debt-free in five years, that’s OK as long as you can save money in other areas and stick to your budget. Otherwise, it’s probably best to lower your student loan payments by refinancing through Credible. When you refinance through Credible you can earn a bonus of up to $750.
Find a budget that fits your lifestyle and spending categories first. Then work on trimming your expenses.
6. You Don’t Have Goals
It’s much easier to drag yourself to the gym if you have a specific target, like losing 20 pounds in six months or keeping the money you bet on a fitness goal. Similarly, it’s much easier to work toward a financial goal rather than merely saving money because you know you should. If you find it hard to stay motivated to save money or follow a budget because you don’t see the point, you first need to figure out what your goals are.
Before you try yet another budget, ask yourself some questions. What would you do with an extra $250 or $500 a month? Would you be able to buy a house sooner or contribute more to your retirement plan? Maybe your family could finally take that dream vacation to South America or spend a month driving across the United States in a camper van.
When you’re thinking about your goals, make sure they’re SMART goals: specific, measurable, attainable, realistic, and timely. Whatever the goal is, knowing you’re working toward something makes it much easier to stick to a budget.
7. You’re Not Rewarding Small Successes
Just like a lack of goals can hurt your motivation, failing to build in any rewards also makes it harder to stick to your budget. It sounds counterintuitive since the whole point of a budget is to reduce spending, especially in frivolous categories.
However, according to a 2017 study published in the journal Frontiers in Human Neuroscience, there’s some science behind this tactic. By rewarding yourself for minor victories or achieving small goals on the way to a larger one, you trigger the release of dopamine, the feel-good chemical, in your brain. The dopamine’s positive effects encourage more of the behavior that brought about its release in the first place. So if you’re not rewarding yourself, you can lose the motivation you need to stick to your budget.
Conversely, don’t fall into the trap of overdoing it. Spending half of what you saved in the last two months on one night out with friends is a budget-killer.
To reward your successes without completely derailing your budget, make sure the rewards are small, measurable, and disciplined. For example, if you stick to your budget for the month and don’t overspend in any category, reward yourself with an inexpensive luxury.
It’s essential that your reward feels indulgent and makes you happy. It can be as simple as taking a long bubble bath while your kids watch a full-length movie or skipping the dishes for a night and getting into bed at 8pm to binge-watch your favorite guilty-pleasure show. Or splurge on something small, like gourmet coffee beans, which can also save you money by keeping you away from that pricey coffeehouse for a while.
There are tons of free and inexpensive rewards to help you avoid frugal fatigue, which can lead to falling off the budget wagon and blowing all the cash you’ve saved after making yourself miserable. Make a list, and when you achieve a small goal, pick something off the list as a reward for your success and to help you maintain your motivation.
8. It’s Too Easy to Spend Money
What do one-click ordering, stored payment information, and subscription boxes all have in common? They make it very easy for you to spend more money than you intended to. That’s especially true if you’re paying for everything with a credit card. Credit cards encourage consumers to spend more.
Add some friction back into your spending. Is it too easy to whip your credit card out when you’re online shopping during your lunch hour? Leave the card at home or in your car so it takes real effort to use it.
Also, remove your credit card or bank account number from any website that stores it in your profile. That way, you won’t be tempted by the ease of one-click ordering.
Anything you can do to make it harder to part with your paycheck can help you stick to your budget.
Pro tip: Right after you remove your saved credit card from your browser, install the Wikibuy extension. When you do shop online, Wikibuy will automatically apply available coupon codes to help you save money.
9. Increase Your Income
Finally, take a look at your budget and ask yourself if you truly cannot trim it any further. Have you cut cable, used a service like Truebill to slashed your subscriptions, and reduced your transportation expenses to the bare minimum? If you never eat out, are a seasoned home gardener, and do all your own home maintenance and upkeep, you’ve probably reached the limit of expenses you can reduce while still leading a life worth living. If this sounds like you, and you still feel like you’re failing at keeping a budget, it’s probably time to explore something other than decreasing your expenses.
The good news is there are many ways to increase your income. If you’re employed, maybe it’s time to talk about a raise or promotion. If that’s not an option, look for a new job or side gig. Perhaps you can do odd jobs around the neighborhood like babysitting, dog walking through Rover, delivery groceries through Instacart, or general handyman chores through a site like Thumbtack. If you’ve got an extra room in your house, look into renting it out on Airbnb.
If you’re crafty or like to sew, list some of your creations on a marketplace like Etsy. If you raise chickens, like to bake, or are an experienced canner, see if you can interest your neighbors in your wares.
There are a ton of different ways to increase your income, so if saving more isn’t an option, think creatively about how you can make a little more money to help your budget succeed.
Finding a budget that works for you and your family and sticking to it is both an art and a science. It can also be an exercise in frustration. However, a reasonable budget can help you turn money into a tool you can use to make your life better, happier, and more productive.
When you’re asking yourself why your efforts at sticking to a budget have failed in the past, keeping your goal in sight helps you find the right strategy for you to make your budget a success. Once you get into a rhythm with your monthly budget, you can create a special holiday budget to start planning for the extra expenses that time of year brings too.
What budgeting method do you use? Have you ever had trouble sticking to your budget?