You’ve probably heard over and over that you need a budget to help you take control of your finances. So, you create one and wait for all these magical things to happen only for the spark to be missing, right? Don’t worry, it happens to the best of us.
In this post, I’m breaking down 5 signs that indicate your budget is failing, aka sucks, and how to fix it!
Overspending indicates that a particular category, or categories, of your budget, is just not working. You may not have allocated enough money towards a particular expense, or you’re putting too much money elsewhere
I once limited myself to $30 bi-weekly for household products (mind you, this was with kids) to free up more money to save. What I was thinking—or if I was even thinking at all— I’m not sure because all moms know one box of diapers wipes that out completely.
When you revisit your budget, the key is to be realistic. Because of my unrealistic expectations, I always wound up having to borrow money from the savings account I thought I was increasing.
Determine how much money you truly need by tracking your spending and adjust your other categories accordingly. For example, if you have $40 going towards gas every two weeks but you need to increase it to $60, determine where you can safely pull the additional $20. Can you reduce an expense or do away with any to free up extra money?
Check out these money-saving posts!
You’re a transfer queen
Online banking transfers are great right? You can transfer funds from one account to another with the swipe of a finger from basically anywhere. A+ for convenience, but not so great when it comes to your budget.
Why? Because consistently transferring funds means something isn’t being properly budgeted for.
Before I broke my budget categories up into multiple bank accounts, I found myself transferring funds a lot more than I should have. This was because I was spending more than I had allocated based on unrealistic expectations or a lack of discipline. For the sake of this post, we’ll go with unrealistic expectations.
A quick tip is to look through your bank statements and tally up how much was spent on each expense. This may take a little time, but it’s crucial to find what isn’t working. Compare the amount you are spending on each expense to the amount you’ve budgeted.
If you’re spending more than $5-$10, then that’s a good sign that category of your budget is failing and needs to be adjusted.
I highly recommend using Personal Capital to help you keep track of your spending. The basic features are completely free and you can add all of your bank accounts, loans, credit cards, etc. all under one log-in. Check out my review of Personal Capital here!
Being miserable while trying to pay off debt is not the right way to go. I used to cut out everything I enjoyed just to save a few bucks and I felt like a prisoner of misery. I was so deprived that when it was time to make a few purchases I couldn’t stop filling up my cart because it gave me back that joy I did away with.
If you don’t have a section for some type of entertainment/pleasure then you risk the chance of sporadical overspending. Think of it like starving yourself to lose weight. You think you’re doing something beneficial, but in reality, you’re just setting yourself up to gain even more weight.
Yea yea, paying down debt and everything requires persistence and willpower, but you should be able to enjoy yourself in moderation. The journey to financial freedom may be a long one, and who wants to wait 5+ years before they can have a little fun? Not me!
Go back to your budget and see if you can add in additional funds for entertainment. Can you cancel a subscription you don’t need? Remember that fun doesn’t have to be costly. Simply ordering take-out once a week may be the boost you need to save you from a failing budget.
Additional posts to help you with your budget!
Your budget is your personalized spending plan and the point of it is to tell your money what to do. If you’re confused about where your money is going then there’s no doubt that your failing budget needs some tweaking.
I like to use the zero-based budgeting method so that every dollar is accounted for. Let’s say you have $100 remaining after your subtract your expenses from your income. This will be considered your spendable income. Instead of leaving that $100 hanging around, designate those dollars to go to something specific.
When each dollar has a job, you don’t have to worry about what goes where. This helps to reduce the chances of you using money that belonged somewhere else.
You don’t have enough to cover your expenses
This is the most obvious sign that your budget is failing, especially when you know that your income should exceed your expenses.
If you came up short on your bills, you may have an issue with:
- Spending money you don’t have. Somewhere deep down inside of us there’s a spender. Buying things gives us a temporary high that can turn addicting extremely fast. Simply telling yourself to stop spending isn’t going to help much so I won’t waste my time claiming that to be the remedy (been there, done that=fail!).
Instead, set small goals and create action plans to achieve them. This helps us become more intentional with our spending. It can be as simple as saving your first $500, just be sure to remind yourself of the end goal and keep yourself motivated.
- Not giving yourself enough wiggle room. Not every bill will be the same amount each month. For those that fluctuate, such as an electric bill, be sure to give yourself some wiggle room.
For example, my electric bill ranges from $70-$90 each month. Because I know I can’t predict the exact amount, I budget $110 each month. This way, if the current bill is less than what I budgeted then my account has extra funds available to cover the cost of the bills that may be higher than normal.
- Expenses exceed income. This is a common issue, but there’s not a 1 size fits all solution. If you find yourself in a situation where you don’t make enough money, first comb through your budget to determine where you can make cuts and adjustments. By doing this, I was able to free up an extra $350.
If you’ve gone as low as you can go, the most logical solution would be to make more money. This could entail picking up a part-time job, doing side-gigs, or selling your services/products. To make this easy, I created an eBook detailing 20 of the best side hustles and how to get started. Learn more about it here.
It’s important to recognize when your budget is failing otherwise you can wind up stuck in the same spot you started in or worse. When your income and expenses change, so should your budget. Finding a happy medium may take a lot of trial and error, but the result is worth the trashcan full of jumbled up failures!
Resources to check out!
The “Broke” Girl’s Guide to Saving Money course. Don’t know where to start when it comes to saving money? Or, do you wind up quitting because you always find you need the money you contributed right back?
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- How to keep your head in the game so you don’t wind up quitting…again
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