3 Reasons Why Your Budgeting Isn’t Working
Budgeting has been proven to improve your finances. But if you feel like you’re doing the best you can but are still having issues sticking to a budget, then it could be because of one of these three reasons.
You don’t know where your money is going
When you create a budget, it helps to start with the big picture of how much money you bring in and how much goes out each month. However, the details matter when it comes to controlling expenses. If you don’t know exactly where every dollar is going, then it’s difficult for you to figure out exactly how much to spend on different categories. In order to figure out where your money goes each month, review your bank statements and categorize each amount being spent. For any cash advances, get a receipt every time you spend those funds.
2. You don’t account for variable costs.
Let’s face it: Not every bill comes in at the same amount each month. Sometimes, you end up paying more for groceries or splurge on something extra during the holiday season. Be sure to leave some wiggle room in your budget for expenses to vary so that when they arise, they don’t put a serious cramp on your cash flow or send you into debt. With the rising costs of groceries, gas for your vehicle, heating and electrical costs for the home, it is very important to monitor spending patterns in order to identify any opportunities for savings and to quickly make adjustments to the budget.
3. You set unrealistic goals
When we set our budgets, we have the best intentions. We want to save as much money as possible so we can reach our financial goals. And let’s face it — saving money is hard. Many people set unrealistic savings expectations for themselves when they create their budgets. They try to cut too much spending in order to commit to putting a certain amount in savings each month without having a clear understanding of where their money goes each month.
Budgeting is all about understanding and controlling your money. It’s one of the most powerful tools that you have available to you, and it can essentially transform your life. If you don’t like the position that you’re in financially, then it’s time for you to take control of things and get started with a budget