If you have ever asked, ‘how do I put together a budget’, you are not alone. It is difficult to set up a budget and stay true to it, with a myriad of expenses coming our way. Have you ever wondered what the biggest hurdles to budgeting are and how people get around them? Some common problems with budgeting include:
Your budget may be too restrictive. Sometimes we want so much to save money that we put our budget in ‘bare bones’ mode. If you stick with it, you should have money left over at the end of the month. But probably what does happen is that somewhere midmonth, you toss the budget out the window because you don’t have a prayer of it helping you manage your spending. A budget is a plan, but life happens in the middle of our plans. Just note the ‘real’ expenses that you had in each area of your budget for a greater understanding of your real expenses.
Your goal for a budget isn’t clear. We have to have a reason to set a budget. If it is too big as in ‘I want to be a millionaire in retirement’, that goal is too big and too far away. Instead, consider smaller goals like paying off a small debt or saving for a weekend getaway to help you stay focused.
You haven’t adjusted your budget – ever. The kids are growing and the car is getting older. These are two of the biggest reasons that the budget needs adjusted each and every year. As well, your budget might provide you clues as to when you should just replace your car and stop paying bills for maintenance. Even small adjustments can keep your dollars in check, but remember that your budget needs to be realistic.
Don’t fail to have a plan for emergencies. The water heater has sprung a leak and the stove has finally conked out. These things are going to happen and we need to have plans in place for emergency repairs. Emergency expenses are the most likely culprit for completely derailing your budget. You need a plan and a few dollars tucked away for these rainy days.
No plan for the ebb and flow of money. Budgets are fluid across the year and most of us haven’t given thought to spacing out expenses that can be too big in any one month. Plan for a dentist appointment in a non holiday month and try to buy school clothes across several months to even out your budget and help to stay within your limits.
You might find, as I did, that this budgeting process encourages me to spend money on an item I would have bought anyway when the time and the price is right. Want more information? See Managing Your Money , materials from our Extension friends in Missouri.