It was innocent enough – you set the goal to get this money thing figured out and then BOOM, here you are months/years later in no better place than when you started. You know you have to live on a budget to win with money, but somehow it just isn’t working. Here are the five biggest reasons I run into when I talk to people who tell me their budget isn’t working…and how to fix each one of them.
You’re Not Actually Doing One
We’re friends, right? You can be honest, right? If you think you have your financial situation under control but aren’t doing a budget, something’s awry. If you’re not actually doing a budget, start TODAY. Really – it isn’t that hard. It is just something you have to decide is worth the time and effort. Some of you have already glazed over and are thinking about the next episode of your favorite soap opera. Let me sum it up for you: he’ll commit adultery with some “lady,” try to kill her husband and then there will be some dramatic climax – end of episode. Rinse and repeat with minor variations for the next 5,682 episodes. Cut to personal hygiene commercial. See…that’s no fun. Why not spend the 30-60 minutes and get your financial life in order?! I’ll even give you my FREE guide to budgeting, It’s Not About Money.
You Aren’t Sticking to Your Plan
Okay, so you’ve tried the whole budgeting thing but you just can’t stick to the plan. I can hear you now saying, “but it is hard!” I’ll grant you that the math of a budget is easy, but the behavior change can be hard. If you’re not sticking to the plan, it could be that you made it too complicated (nerds tend to do that, of which I am guilty) or you just don’t like to deal with numbers.
As my favorite financial guy, Dave Ramsey, says, “If you managed money for ‘You, Incorporated’ the way you manage money for you now, would You hire you?” If the answer is ‘no,’ then you need some motivation and a plan to get back at it. Here’s a great article to get you started on becoming a better employee for ‘You, Incorporated.’
You’re Being Unrealistic
You’re smart enough to know that the math of a budget has to work, but you’ve “made it work” by making unrealistic estimates on your categories. If you drive 500 miles a week and only budget $100 for gas each month, you obviously weren’t realistic. If you have a family of 12 but only budget $250 for groceries per month, you are either growing a lot of your own food or you didn’t allocate a realistic amount. Look at your numbers. Do they make sense? If something isn’t working, make adjustments with reality in mind to get things where they need to be.
You Can’t Agree with Your Spouse
If you’ve read much of what I’ve written about relationships and money, you know one of my favorite lines is, “it won’t work if you don’t agree.” While I am a traditional believer that God gave the husband the ultimate responsibility to care for his wife and family, I’m not stupid enough to think Stacy (my awesome wife) doesn’t play a HUGE role in making that happen.
I don’t care who actually handles the mechanics of the finances, BOTH OF YOU must participate and agree on where you’re going. That way, when things go well, you can celebrate together. When things don’t go well, there can’t be a finger-point of blame. You are a team – act like it!
The Math Doesn’t Work
The math of a budget is VERY simple:
INCOME – SAVINGS – EXPENSES = 0
Everybody whose budget is broken usually claim the math doesn’t work. “I don’t make enough money” or, “I have too much debt” are the cries when reality is most of the time, it is a behavior issue. However, there are some of you who truly can’t make the budget work because the math doesn’t. What do you in those situations?
You need to really do a self-assessment and determine what has to change. The easiest place to start is with your expenses. Look at every expense – what can you reduce or cut out altogether? REALLY LOOK. If you have credit cards or similar consumer debts, stop using them immediately and start paying off the debt rather than going deeper.
If the math still doesn’t work, start looking at your income. This is tougher to increase, but it is possible. Can you sell some things to pay off some debt and balance things out? Can you get additional hours at work for a short time? Is it time to begin looking for a better job? There are plenty of options to explore if the math doesn’t work and the best one I would recommend is consulting a financial planner. Be creative and know that you’re planning your long-term success!
In addition to these items, I thought it might help to give you some articles I’ve written that go a little deeper.
Okay…your turn. Questions? Comments? Share your thoughts below.
Barry, have you been spying on us for a few years? It’s one thing to put down on paper–even having reviewed the last several months outgoes to make sure we know what our real expenses are–but it’s an entirely different thing to say, we have how much? Okay, then let’s spend it on A, B and C, and D (D=Dinners out!) is gonna have to wait.
We finally found out that we need a budget, like, a REAL budget, and one that we can update on the fly, one that we can both use, and one that we can adjust as needed for when expenses don’t match budgeted amounts. Guess what? Someone already wrote the software. They did it JUST for me, and then called it You Need A Budget. YNAB. It’s literally changing our lives, because it introduces the dual-accountability of he knows what she spent, and she knows what he spent, and oops, we went over in gas so we have to adjust from somewhere.
Seriously. Budgeting and sticking to it is life changing. I can’t recommend enough that if your (and Stacy’s!) readers struggle with paper budgets, spreadsheets, or cash envelopes (that never worked for me since everything is electronic payment for us), to check out YNAB. And no, I am not being compensated to recommend the software–it REALLY is THAT GOOD!
These are some great tips. I have fallen guilty of not being realistic with my budget. I learned that the hard way, when I was frustrated with not seeing any change. I think that you’re so right about it being a behavior change. THAT is my hardest obstacle. We are on our second month and I think I’m doing much better.
Thank you for sharing!
Our budget is working, but it’s a little like another child: the minute you take your eyes off it, it starts to get into trouble. 🙂 Budgeting is definitely an active process and not one that does well on autopilot.
I enjoy your posts, but I have a unique question for you as I am not sure you addressed this in your columns before… I have been a SAHM for the past 4.5 years and we have lived/saved/became debt free while living on one income (my husbands) and survived! 🙂 As of this last week, I found a wonderful PT job that we have chosen to put my paychecks automatically deposited into our savings account…thus still living on one income. My/Our question…what do we do with my income money in savings? We aren’t yielding a lot of interest…so what do you think would be the best to do with that money to save it/grow it for the long run. Thanks.
If by long term you mean 5-10+ years, you are really talking about INVESTING. Here are a couple of articles that may help: http://www.stacymakescents.com/whats-your-plan-for-retirement
http://www.stacymakescents.com/setting-a-savings-goal
Let me summarize it this way – don’t stick with a savings account because you’ll never keep up with inflation. Learn about what it means to invest in mutual funds, a Roth IRA, etc. (depending on what your actual goal is) before you jump in. When you jump in, only invest in those things you are comfortable with – this is a marathon, not a sprint – don’t try to be clever. Be boring, smart, and a long-term thinker.
Thank you for this information. I will be contacting an accountant who I understand is a friend of my neighbor to discuss us long term. Yes, 5-10+ years 🙂 Thanks again for your input and that link.
🙂 I needed this! Number one is our problem!…well, ok, our biggest problem.
I’m excited to tell y’all that our van is now paid off!!! Praise God! Now we have enough money to actually make a budget! Anyway, we have three more debts to pay off to be debt free and finally on our way to having our own place to live!
YAY!
I understand all of the math and the behavior. But any advice for how to make it all work when you have. Special needs child who needs therapy and medication to be given the chance of becoming independent at some time. Not sure how much we can continue to cut back, and still save while giving him what he needs.
Every one of us is given a challenge that makes our budgeting difficult. Yours sounds like a TOUGH one. However, the math doesn’t change – only the priorities do. Sit down and define what is important to you and act on that. Make the math work, but live according to your priorities instead of what someone else tells you is important.