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Problem: Many budgets are not realistic.
Solution: Create a budget that is realistic for your family.
Many people tend to be unrealistic about the necessities such as food, clothing and shelter. Thrifty is one thing, but many people undercut these expenses to a point that the budget is totally unrealistic and impossible to stick to, and that leads to a broken budget. Create a budget that is realistic for your family and meets your family's needs.
Track your expenses with a spending log. Write down every single penny that you spend, recording the item or service purchased, the date and time and the amount of the purchase. This serves as an aid in several areas. You can see just how much you spend each month in certain categories and you can see where your money goes each month. If you are nickel and diming your budget, this will bring that to light.
Problem: Many budgets do not connect from month to month
Solution: Create a budget that works for you from one month to the next
There are always things that can cause your budget to change from one month to the next. Your car registration can be due or your dog may need its yearly vaccinations. A budget is not a static document, it should be flexible enough to accommodate the expenses that do not occur monthly as well as unexpected expenses.
To fix a budget, you need to look at it from month to month and make the necessary adjustments. If you ran out of money one month and were unable to cover all of your expenses, then make some adjustments for the next month so that it doesn't happen again. This may be an ongoing thing, particularly if your circumstances change regularly. Life is not static, you can't expect your budget to be either. Keep your budget flexible and work with what you have.
Problem: Many budgets fail to track disposable income
Solution: Allocate every cent of your money to something
One problem that many people have with a budget is that when they pay off all of their monthly expenses and have funds left over, they don't have a place for it. Spend your entire monthly income on paper before you do it for real. The money that exists after all of your bills are paid is your disposable income. Many budgets fail because people do not plan for where that "extra" money is going.
To fix a budget you need to give all of your money a category. It doesn't matter if you allocate that money for entertainment, retirement, savings or paying off debt, make sure that you slate it to go somewhere. Write down everything that you will spend, where you will spend it and make sure that you account for every penny.
These are the keys to a budget that works. If you want to fix a budget, it takes work and flexibility, but you can do it!
SUMMARY: The way to fix a budget is to address the three main reasons that budgets fail. When you correct the common budget problems, you can create a budget for your family that you family can actually live with and use.
Resources:
Mvelopes Personal 3.5
- The
easy software-based budgeting system. Check it out!
Mvelopes Personal is an online budgeting system that makes it easy to create an effective personal budget and track every aspect of your spending as it happens. It will help you always know exactly how much you have left to spend, instantly know the impact of every spending decision, effectively manage credit card spending, and quickly create an easy to use household budgeting plan. Click here to learn more
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Personal Money Management Basics
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Did You Know... |
49% of adults, and 66% of US high school students got F's on a national test on their knowledge of basic economic principles.
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Food for Thought... |
"I'd rather go to bed without supper than rise in debt."
-Ben Franklin.
