Finances

Struggling to Stick to a Budget? Learn How to Stay on Track for Good

When you are trying to decrease your spending and increase savings, the piece of advice is always to start a budget.  The problem with that? The advice can’t stop there.  Budgets can be daunting, hard to maintain, and unrealistic.  Similar to starting a new diet plan, if you don’t work to change your habits slowly it is very difficult to maintain the new lifestyle.

Reasons Budgets Fail

1. Unrealistic at the starting gate

You reviewed your spending and see that you spent $1,000 last month eating out. The common first thought would be “Wow, that’s an easy place to cut back.  I’ll just meal plan and bring lunch to work.  Let’s cut that to $200 a month.”

Take a step back first.

Your lifestyle grew to the point where many daily habits added up to eating out regularly.  Maybe you struggle to find time at night to cook and you don’t want to even think about meal planning, you just want the easy answer to relax. Slashing eating out drastically will have a large impact on your daily life which is most likely not sustainable.

The answer would be instead to make the $200 a distant goal in 8 months.  Each month, decrease the budget for eating out $100.  This is a much smaller bite and will allow you to gradually grow new habits. You can start by making one meal at home a week with enough to bring leftovers the next day – 2 meals done right there.  Multiply that by 4 weeks in a month and you have saved eating out 8 times with only having to cook once a week.

By gradually easing into a new habit it’ll become easier and easier versus immediately forcing yourself to bring lunch to work daily and becoming a meal planning fiend for every meal.

2. Not budgeting for surprises

It is super easy to take a look at only consistent spending habits for shopping, dining, and entertainment and make small adjustments here and there to save. Maybe you saved $200 last month not shopping as much and eating in.

Congratulations! That’s an accomplishment!

The next day, however, SURPRISE!

Your car needs a new transmission.

This is certainly more than the $200 you just saved and it is an unavoidable cost.  When you create a budget, don’t forget to plan for emergencies. You can budget down to the penny for housing and living costs and be religious about following it but I can promise you something that you cannot foresee will come up. Remember when you budget to include money set aside for those surprises.

3. Not consistently reviewing progress

You may think you are cutting back on spending by choosing not to get that coffee one morning or skipping happy hour. But unless you are familiar with your current spending and regularly tracking it, you may be surprised at what little progress is being made.

The easiest way to fail is to dive in head first and try to pull a 180 on spending habits you have always had.  If you make a plan with the following incremental steps and give each step time to form a new habit, you will be on a path to success.

Change your mindset, change the outcome.

budget

How to Successfully Use a Budget

1. Use a budgeting program

To prevent problem 3 above of not knowing the spending amounts, find a program that works for you.  Mint was the first app I used and connects to all your accounts (bank, credit cards, loans, mortgages, etc) and will track all your spending in categories for free.  You Need A Budget (YNAB) is another similar app to this, though I have not personally used it.  Currently, I use Personal Capital.  The charts and analyses are a bit more in depth but the spending categories are more limited, whereas in Mint you can add your own.

This is the first step to really become familiar with where you are spending heavily and start to review where you can cut back.

2. Make it a game

I have found that simply slashing numbers is not typically effective for people. When I really started concentrating on cutting back my spending I actually didn’t create a budget with specific amounts I was allowed to spend.  If I got the urge to go to Target, I would challenge myself to see how many days in a row I could go without spending anything (bills excluded). I wouldn’t buy that coffee or stop at Target “just to browse”.

I wanted to compete with myself to see how many days in a row I did not spend a penny. I made it a game with myself to compete against.

3. Ask yourself these questions

Do you really need it?

Do you already own two pairs of sneakers? Do you need a third? Or are your old sneakers destroyed and you truly need a new pair to replace them?

Wait a week, are you still thinking about that item?

Oftentimes you will have forgotten about in, in which case, did you actually want it that bad?

Do you already own something similar that does the same job?

Yes, that bracelet is adorable. But you own 10 other ones.  What sets this one apart? Probably not much.

How long will the novelty of the new purchase last?

The new iPhone. $1000 for an exciting new toy to play with for the afternoon and next few days.  Two weeks later, are the differences from your prior iPhone worth $1000 or did you just pay for the excitement of having the newest gadget?

Are you being tempted by a sale?

“But these shirts are buy two get one free, I know I’m over the $300 but it’s a great deal.” WRONG.  Do you really truly NEED three new shirts? Do you have nothing similar in the closet? Avoid being tempted by deals.  Unless it was something you actually needed, sales are not deals.  Even if you budgeted for $300 for shopping this month, it is common to talk yourself out of it internally and rationalize the spending. You are still spending money you do not need to spend and getting tricked into spending more just to get the deal.

3 thoughts on “Struggling to Stick to a Budget? Learn How to Stay on Track for Good

  1. I love this! These are definitely some of the most common reasons we’ve heard that people dislike, hate, or just plain give up on budgets. The reality is the process of putting together a budget, then tracking our spending to make sure we’re sticking with it is…well…a total pain in the butt.

    But so is living paycheck to paycheck, or going deeper into debt, or stressing over every single purchase we make.

    This is a solid primer to get people started building their financial foundation. Keep up the great work!

    1. Thank you so much for reading! It comes down to changing our mentality. If you treat it like a super restrictive diet and cut everything out, you aren’t likely to last long without binging.

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