This post is part of our 21 Days to a Better Budget Series and was written by the most organized lady I know, Sarah of Early Bird Mom! To view all the posts in our series, please click here.
Hi Friends! I’m Sarah from Early Bird Mom where I write about organization, chores for kids and other helps for busy moms. Today I want to share with you 5 reasons your budget may not be working and what you can do about them.
I love how Jessi encourages her readers to take control of their financial lives. It’s not easy, but the results are so important. But what if you find your budget isn’t working month after month? What do you do then?
The good news is that if you are even attempting to live on a budget, you’re working in the right direction. So many people don’t even attempt to budget (here are 8 reasons to live beneath your means) and then they wonder why they’re always broke. Congratulations for not falling into that trap.
So why would a monthly budget fail?
Here are 5 reasons you might run into this problem and what you can do about it.
1. You’ll have a budget problem if you’re not tracking your expenses.
This is probably the most common reason people don’t stick to a budget. If you don’t know where your money is going, it’s going to be very hard to make any changes.
There are lots of ways to track your spending:
- a smartphone app (how we track our spending)
- the cash envelope system
- paper and pencil
- tally up receipts and bank statements at the end of the week (not recommended!)
If the thought of tracking each and every purchase makes you shudder, consider starting
out by tracking a few key categories such as groceries, restaurants and other shopping purchases. Once you’re comfortable entering these purchases, you can add more categories.
Tracking your expenses is absolutely critical to sticking to a budget. In fact, I suggest that you track your spending for a few months before you even attempt to reduce your spending. You might just discover that merely the act of recording your purchases helps you to cut back a bit (“Do I really want to buy those shoes if I have to record how much I spent??”)
2. You’ll have a budget problem if your budget is too tight.
This is a really tough one. If you’ve got a mountain of debt, or your mortgage is more than your take-home pay, no amount of budgeting will make the numbers work.
Again, the solution to this problem starts with tracking. You must know how much income you’re making and what your expenses are.
If there’s a shortfall, you have a few options:
Reduce expenses. Jessi has some great advice on this topic! The more creative you are and the more willing to make short-term sacrifices, the better you’ll be able to meet your budget. Move to a smaller home, stop eating out, cut back to one car, etc.
Adjust any outstanding loans. This is a bit different from reducing expenses. I know of an elderly woman who was paying 22% interest on credit card debt. Our church was able to help her transfer this debt to a much lower interest card and her monthly payments immediately went down. Of course she’ll still have to pay off the bill, but at least the interest is not eating up her entire monthly payment.
You can refinance your mortgage or consolidate student loans. Always make sure you understand the terms of any loan consolidation or refinancing. You certainly don’t want any unexpected surprises.
Make more money. This is probably the most motivating option. Who doesn’t want to make more money?
Here are 25 ways busy moms can make some extra money. Just make sure that your spending doesn’t go up with your extra income.
3. You’ll have budget problems if you run out of steam and overspend toward the end of the month.
If this is the case for you, you might want to make sure you’re building in enough fun money into your budget. Even small amounts can help you avoid budget fatigue. It may take a bit longer to reach your goals, but if it helps you meet your (more realistic) budget, it will be worth it. Of course you can also take advantage of frugal ways to have fun that won’t impact your budget.
4. You’ll have budget problems if you keep running into unanticipated expenses.
The car breaks down, the electric bill jumps through the roof or your kids need back-to-school supplies. But here’s where a little tough love is in order. These things are not emergencies! You know your car is eventually going to need work. School starts up every year – kids will need new things.
You have to build these things into your budget. So make sure you have some sinking funds in place in your budget. Even if you can only contribute a small amount each month, it will add up and potentially make a big difference over time. Having a car repair fund turns a mechanic bill from a catastrophe into just another bill to be paid.
And of course, do all you can to keep these irregular expenses low. Learn about ways to save on your electric bill, shop around for the best deals on back-to-school clothes, and make a Christmas budget and stick to it!
5. The last reason you might have a budget failure is due to unexpected and unavoidable expenses.
These expenses are things like hospital bills or a hefty hike in property taxes. These things are truly almost impossible to budget for. If you’re facing an unexpected bill like this, see if there are any payment forgiveness or payment plans you can take advantage of.
An emergency fund is vital here, but don’t allow it to be wiped out by a single event, leaving you nothing for the next emergency.
Again, be encouraged!
If you’re trying to live on a budget, each month is going to be different. There will be times when you falter and times when you overspend. As long as you keep going and learn from your mistakes, your budgeting and spending skills will improve.
What do you do when your budget isn’t working?
Sarah Mueller is a wife and work-at-home mom to 4 rambunctious boys, and the creator of Early Bird Mom, a popular mom blog focusing on organizing, budgeting, parenting, and more. She loves to encourage other busy moms with simple, practical strategies and tips. Get a handle on your money by requesting her free guide to taking a personal financial snapshot.
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Amy @ DebtGal says
Although I’ve been tracking our expenses for over a year, this is the first month we’ve been proactive and had a budget. The biggest kink I’ve had is that I didn’t include all of the categories we’ve needed. For example, I didn’t have an office supplies category, but early in the month I had to renew our Norton anti-virus subscription. I also didn’t include a misc. category (which could’ve covered the Norton payment). For October, I’ve added more specific categories, as well as a misc. one.
Sarah Mueller says
That’s great, Amy! I’m sure you’ll find plenty of things to adjust along the way, but that’s to be expected.
I don’t really budget, but a buddy of mine always has problems with it, last month his water heater went and now he is in the hole again. It’s like the guy can’t see more than 2 feet in front of him. Nice to see people with sense!
Kristy jackson says
I love your information and have really tried using your instructions. I’m an international flight attendant and have budgeted thru cards instead of cash. Any further advice for those of us living abroad mostly?
Jessi Fearon says
Hi Kristy! I’ve never lived abroad, but when I’ve traveled international, I usually put our budgeted amount on prepaid Visa cards and carry some in cash.
Allsion @ Life on the Loop says
Overspending at the end of the month! That’s what gets a lot of people in trouble. Then they end up using their credit cards.