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TRENDING BASIC MONEY MANAGEMENT TIPS
08.09.2021 / Budgeting « Back to all articles
3 Reasons to Ditch Your Budget (for a Better Option)
Budgeting is a necessary part of a healthy financial life for many. However, if you go about it the wrong way, your budget can actually cause more problems than it solves.
If you have been struggling to stick to the budget you have created, it's time to look at the underlying reasons that it isn't working for you. Not all solutions will be a good fit for every person or financial situation. Once you determine what is holding you back, you can fix your mistakes and even choose a better method of handling your money.
Your Budget Isn't Realistic
You had the best of intentions when you created a budget for yourself that accounted for every penny. When you know exactly where your money needs to go, you have better control, right? Wrong. A budget that is too restrictive can be impossible to keep.
Unless you can predict the exact amount of your electric bill each month, and how much your groceries total, then a tight budget will be a problem. Instead of this approach, try tracking your spending to get a better idea of how much these things really cost. Then you can redo your budget with more realistic and forgiving amounts. It's important to remember that you need to have a cushion available in case one of your expenses goes over.
Fluctuating Expenses Are Tripping You Up
Another reason your budget could be faulty is if your monthly expenses change frequently. This can be from higher energy bills in the colder months when you need to turn up the heat, or even from having multiple weddings to attend over the summer.
If you can look at the long-term picture, you can factor these types of expenses into your budget by dividing the predicted cost out over the year or setting up a separate savings category to cover them.
You Lack Motivation and Enthusiasm
Having a budget will do you no good if you don't have the drive to stick to it. You may lack motivation because you aren't paying yourself or rewarding the small victories. No matter what your financial goals are, you need to give yourself an allowance for fun activities, otherwise, you will lose sight of why you are doing this.
When a traditional budget doesn't work, try the 50/30/20 method, track your spending in a spreadsheet, another good choice is to set up two bank accounts. Deposit the money for essential bills into one and leave the money that has more flexibility in the other.
The right approach to budgeting will make a world of difference in the results you see. Don't get frustrated if your first attempt to tackle your finances didn't work out as you planned. Use the lessons you've learned as information to help you create a better plan going forward.
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08.09.2021 / Budgeting « Back to all articles
3 Reasons to Ditch Your Budget (for a Better Option)
Budgeting is a necessary part of a healthy financial life for many. However, if you go about it the wrong way, your budget can actually cause more problems than it solves.
If you have been struggling to stick to the budget you have created, it's time to look at the underlying reasons that it isn't working for you. Not all solutions will be a good fit for every person or financial situation. Once you determine what is holding you back, you can fix your mistakes and even choose a better method of handling your money.
Your Budget Isn't Realistic
You had the best of intentions when you created a budget for yourself that accounted for every penny. When you know exactly where your money needs to go, you have better control, right? Wrong. A budget that is too restrictive can be impossible to keep.
Unless you can predict the exact amount of your electric bill each month, and how much your groceries total, then a tight budget will be a problem. Instead of this approach, try tracking your spending to get a better idea of how much these things really cost. Then you can redo your budget with more realistic and forgiving amounts. It's important to remember that you need to have a cushion available in case one of your expenses goes over.
Fluctuating Expenses Are Tripping You Up
Another reason your budget could be faulty is if your monthly expenses change frequently. This can be from higher energy bills in the colder months when you need to turn up the heat, or even from having multiple weddings to attend over the summer.
If you can look at the long-term picture, you can factor these types of expenses into your budget by dividing the predicted cost out over the year or setting up a separate savings category to cover them.
You Lack Motivation and Enthusiasm
Having a budget will do you no good if you don't have the drive to stick to it. You may lack motivation because you aren't paying yourself or rewarding the small victories. No matter what your financial goals are, you need to give yourself an allowance for fun activities, otherwise, you will lose sight of why you are doing this.
When a traditional budget doesn't work, try the 50/30/20 method, track your spending in a spreadsheet, another good choice is to set up two bank accounts. Deposit the money for essential bills into one and leave the money that has more flexibility in the other.
The right approach to budgeting will make a world of difference in the results you see. Don't get frustrated if your first attempt to tackle your finances didn't work out as you planned. Use the lessons you've learned as information to help you create a better plan going forward.
