You need a budget to ensure that your expenses are controlled and you are financially secure. However, sometimes you might not be able to make the most out of your budget. The numbers might not add up and you will have to spend more than you planned.
Yes, this situation fits a large number of people. If you are one of them, you have come to the right place. In this post, I will share the 7 most common reasons why your budget isn’t working.
1. Not Having a Budget
Can you guess what the biggest budgeting mistake is? Well, not having a budget is the biggest mistake here. If you don’t have a budget, you will not be able to plan and manage your financial situation. As a result, you will always feel yourself trapped into the financial crisis. Instead of building your future, you are just biting the time.
2. Not Following the Budget
And the next big budgeting mistake? Having a budget but not following it. In situations like this, you have the budget and the planning ready, but don’t follow them. You may follow some part of the budget and ignore the others. If you want to improve the situation, revise the budget thoroughly and follow it accordingly.
3. Guessing the Monthly Expense
There are two types of expenses – measurable and unknown. While the measurable expenses are a fixed amount which follows a pattern, the unknown expenses are those which vary and/or often come unexpected. In this situation, you should definitely have a clear idea about the measurable expenses. And maintaining an emergency fund will take care of the unexpected.
4. Not Tracking the Expenses
This is a deadly mistake for anyone, unless your income is unlimited. When you have a limited income, you need to track your expenses closely. The expenses should be decided based upon your income, not the other way around. Identify your biggest sources of expenses and find out how to reduce their sizes.
5. Spending More than You Earn
For this point, the title says it all. Your budget definitely fails when you spend more than you can afford. Despite being common sense, we make the same mistake over and over again. Let me tell it one more time – don’t spend more than you can afford. There are no special tricks for this to happen, it depend on you.
6. Not Having an Emergency Fund
We already discussed the importance of having an emergency fund. But this is so important that it deserves to be mentioned as a separate item. When you have an emergency fund, you won’t have to take money from your budget for unexpected events. Having such a fund will also make you more confident.
7. You are not Self-disciplined
If you lack self-discipline, you will have a very hard time in sticking to the budget. You will often give in to the advertisements, temptation or peer pressure. As a result, you will often end up spending more than you earn, which means a complete financial disaster. If you are really serious about your budget, you should be self-disciplined, there is no alternative.
Having a well-thought budget and maintaining the budget are two of the most essential steps for ensuring the required balance. If you want to have an effective budget, avoid the issues described above and you will do great.