Show of hands. Who really loves living on a budget?
If you’re an adult with adult responsibilities, then you probably already know how intensely difficult budgeting can be at times. Creating a spending plan designed to help you control your finances is one thing. Actually sticking to that budget is something that proves to be another matter entirely.
I can certainly relate to the thought, but let me ask you this: How many different times in your life have you tried to create and/or stick to a budget?
Once? A couple of times? More times than you would ever care to admit.
Again, I’m right there with you. It’s tough. Do you know the old saying about how a certain road is paved with good intentions? I would venture to say that you can definitely apply that thought to using budgeting to come up with a spending plan that will allow you achieve your various goals with your finances.
Is creating a budget something that can actually be done?
The Problem With Budgeting And Spending Plans
If you find yourself repeatedly frustrated by attempts to stick with a budget, you’re not alone. It seems as though millions of people struggle to even create a realistic, actionable budget, to say nothing of actually sticking to the plan.
The challenge on your end then is to first create a realistic budget, and then stick to it, no matter what.
But again, we know this is easier said than done.
Relax. There are actual scientific reasons behind your inability to stick to a budget.
One of the biggest problems with budgeting and the concept of a reasonable spending plan with your finances is largely psychological.
As our society becomes less and less reliant on physical cash, the connection between responsible spending and what we actually have in the bank becomes an increasingly difficult concept to grasp.
What I mean is that there are studies out there that suggest that paying with credit cards and the like is actually easier than paying with cash. With credit cards, we have instant gratification, and we don’t have to worry about the consequences of our actions for a good while. With cash, we have tangible evidence of depleting our financial resources.
Another reason why we fail at budgeting?
It’s just not very much fun. This sounds like a common sense kind of statement, but it still makes sense. A spending plan feels a lot like dieting, which is why these are two of the most difficult things in the world to stick with.
We have a hard time losing weight, and we have a hard time staying responsible with or finances. The problem with diets and budgets is the way they force us to focus on the restrictions, and not on the fun parts.
While a part of our brains know that we can still have fun on a budget, a much larger side of our brains would prefer to focus on the restrictive components.
Your budget can be the most grounded, do-able thing on the planet. Your brain will still find a way to make you cheat in favor of immediate pleasures.
What’s to be done?
How To Fix Your Budget
Let me put it as honestly as I can: Pure self-control doesn’t cut it.
I’m not saying that you lack self-control. Not at all. What I’m saying is that even the best examples of self-control imaginable can eventually fail, particularly when it comes to budgeting. What you have to do then is come up with things that can supplement your budgeting goals.
This isn’t as hard to do as you might think. A spending plan is just that.
However, combine it with other ways to keep track of your finances, and you stand a much better chance of actually saving money for things like a new home, a new car, a vacation, or even for your retirement.
One of the first things you should do is become more self-aware of your spending behavior. Connect yourself to the reality of every single purchase you make. Even if you just jot down purchases in notebooks, notepads, or even in a document on your phone, you will slowly begin to develop a real sense of what you generally do with your money. At this point, you’re going to be in a much better position to start creating a half-decent budget.
And I gotta tell you, when you have a tangible goal in mind, budgeting is a whole lot easier. Make it something that you truly want, not just something you think you should have. Make it something fun, if it at all possible.
More Budgeting Tips
Break down your finances into various mental checking accounts that are treated differently. Consider having money for certain things taken out of your account every month. Build a budget that subtracts the end result, and then builds from there.
- Write down 3 long and short term financial goals. Start with: “What do I really want?”
- Spend an evening reviewing your finances
- Use Mint, Hellobudget or Pocketsmith to review historical spending. PocketSmith will also allow you to forecast spending and saving.
- Take note of spending which goes against your financial values and make note of possible adjustments that may be needed to reach your financial goals
- Rearrange your financial process to automate everything
So let’s get honest for a moment: regardless of what budget or spreadsheet we obsess over, if there’s not enough money coming in then it doesn’t matter what budget prescription is given. If we hate the process of restricting ourselves, then we’ll only grow to resent it and fall of the wagon anyway.
Spend money on the things that you value and what makes you happy. Toss out the prescriptive budgetary percentages.
What do you value? Do you want to live in a more expensive area with a better school district?
That means you value a good education for your kids. You’ll just have to make the necessary adjustments in order to do so.