Budgets are one of those things that we love creating, but find it hard to stick to. Most individuals have made a budget at some point in their life, but very few are executed to perfection.
Some find themselves drowning higher in debt and eventually requiring debt consolidation services. Yet, others feel hopeless and must reply on lines of credit, which further impacts their budgeting practices.
You may find yourselves asking: why are budgets so hard to stick to, and how can I find ways to make them work for me?
This article walks you through the top 5 reasons that budgets fail and 5 ways you can succeed! Read on for more.
1. Unrealistic goals
The most common reason budgets fail is that some individuals set unrealistic goals. While every reasonable budget aims to cater to your financial history, needs, and goals, it can be tricky to expect your budget to solve all your financial problems.
Budgeting is all about long-term planning and paying all bills as they become due and consistently putting away set amounts of cash each month to deal with unplanned emergencies. Many individuals try to create a budget that will pay off past debts as soon as possible, but that can backfire if your new budget forces you to make too many drastic changes to your lifestyle that are not sustainable long-term.
Setting unrealistic goals can discourage you from following through on your budget or create a sudden change to your lifestyle that you are not ready for.
Although smaller saving goals will mean your larger aims take longer to achieve, they will also be easier on your lifestyle (and your pocket).
Don’t forget to try and accommodate for emergency expenses rather than just feeding your debts. Make an exhaustive list of all your expenditures and bills, and work backward from there. You should be able to live comfortably with enough to support your lifestyle.
The primary way to succeed here is to practice moderation in saving, spending, and more. You can use this debt calculator to account for your current debts accurately.
2. Lack of commitment
Many people make enthusiastic budgets and then lose their motivation to adhere to them after a few short weeks.
The usual reason for this is that budgeting requires change, and letting go of some comforts can be challenging. It is also a chore that needs to be tracked daily and implemented into a non-negotiable habit.
Lack of commitment can severely hamper your financial progress. Thus, it is essential to avoid it.
You can improve your budget commitment by changing your mindset.
Instead of viewing your budget as a chore or a theoretical idea, make it concrete by putting it into practice. Start slowly by changing your habits, and start getting excited about adhering to your budget.
It is, after all, the pathway to achieving your financial goals.
3. Not having enough fun
That brings us to our next mistake. It may seem counterintuitive, but budgeting can be fun! And if you are finding it challenging, the best way to make it easier is by introducing some fun to it.
It’s very much like dieting; if you don’t allow yourself a few cheat meals, you’ll never make it to your goal weight!
Instead of setting impossibly strict spending guidelines, give yourself some room to let go and enjoy life every now and then.
Don’t live outside of your means and spending goals, but enjoy a few treats and extras.
For example, if you have switched to making coffee at home to limit expenses, have the occasional coffee treat from your favourite coffee shop. Or, allow yourself a weekly fun budget, which you can use however you wish!
Another great way to introduce some fun is to set spending goals. Every time you hit a significant milestone, give yourself a treat. This way, you have an incentive to work towards while maintaining your budget. It’s a win-win!
4. You’re missing the miscellaneous expenses
We all have unexpected life events crop up. A limited budget is an unsuccessful one.
We see that many individuals do not adequately budget for miscellaneous expenses. Whether it is a gift that needs to be bought or some minor fees that must be paid, these things happen to us all.
If you find yourself with a budget that has no leeway to manage these expenses, it is a sign that you need to modify it.
If you find yourself with extra cash or a bonus from work, try to put it away instead of spending it.
This way, you’ll have extra savings that you can allocate as you wish. Or, plan for a percentage of your budget towards future miscellaneous expenses.
You may find that some months you will spend it, while others you won’t. Once something unexpected comes up, however, your miscellaneous budget category will help account for the cost.
5. Lack of emergency planning
If something unexpected and urgent comes up, what will you do?
Many individuals fail to have an emergency fund to use towards unanticipated medical bills or a sudden lay off. These life occurrences can happen to all of us, but if you don’t have a financial plan, then you’ll be in trouble.
Many individuals find that they need debt consolidation services or need to file for bankruptcy after taking out too many lines of credit.
How can you avoid this? Well, your emergency fund needs to be the first financial goal that you work towards.
Most financial experts suggest saving three to six months of living expenses. Once you have that, you can start working towards your other goals. This way, if anything happens, you’re all set up.
There you have it: 5 ways that budgets fail, and how you can succeed!
Budgets are tricky to manage, but once you find a formula that works, it’s smooth sailing. Maintain consistency and continually find ways to incorporate financial tricks and prudence to keep your budgeting efforts alive.
If you require more professional help, be sure to reach out to Kevin Thatcher & Associates. Our friendly team has years of experience dealing with high-interest debt cases and can help you take out debt consolidation services within a manageable monthly payment.
To set up a consultation or find out more about debt consolidation services in Toronto, call Kevin Thatcher & Associates at 1-888-702-9801 or contact us here.