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Why You’ve Failed at Budgeting in the Past & How to Finally Succeed
Do you feel like you’ve tried to budget, but it’s just never worked for you?
Why You’ve Failed at Budgeting in the Past, You Didn’t Know the Step Needed Before Creating a Budget
First off, I want to let you know that you “failing” at budgeting, isn’t your fault. It’s not you, it’s the system that have been using, that sets you up for failure.
I’m going to share with you, why you’ve failed at budgeting in the past and what you can do to finally be successful at it.
Most of the time, when you think of getting your finances in order and budgeting, you think that what you need to do, is to sit down and write a list of all your expenses and how much they are for each month and then write the total and try to stay within that amount each month and then you will be successful at budgeting. Does this sound familiar?
When you budget like this, that is the exact reason why you are not successful at it.
Before you do up a budget, what you need to do be doing, is tracking your spending first before you ever create a budget.
Think about it this way, how can you create a “budget” and expect to stay within it, when you haven’t been tracking your spending and you don’t already know where your money is going and how much of it is going everywhere?
Yes, you know how much your rent or mortgage is, your vehicle payment and likely your utilities, but there are so many other expenses that you really have no idea how much you are spending on. Which means if you don’t already know how much you are spending in those categories, that your budget won’t be anything near what your expenses really are. Then when you create your budget, you feel like you’ve failed because there was no way you could stay within it and have the “numbers” match at the end of the month.
The Non-Recurring & Random Expenses are Throwing Your Budgeting Off
Most of the time we write down our basic monthly expenses, but don’t take into account all of the expenses that aren’t monthly, but come out irregularly, in large sums once or twice a year or are the “odd” types of expenses that are also irregular.
How to account for these expenses, is to write down on a piece of paper, on a spreadsheet or in your calendar, when all of these non-recurring and random expenses are.
Think about all of the expenses that you have in a year and write them out, when they are due and approximately how much they are. These will include your monthly, non-recurring and random expenses.
Some Examples May Includes:
- Credit cards
- Student loans
- Personal lines of credit
- Vehicle payments
- GST payments or tax installments
- Other debts
- Cell phone/Landline
- Garbage disposal/recycling fees, etc
- If you don’t know when your water or garbage or other fees come out because you just get a letter in the mail from your town or city, e-mail or phone your city or town and find out when the next one is coming out and then write it down.
Insurances and Other Fees:
- Life insurance
- Home insurance/renter’s insurance
- Homeowner’s association fees/condo fees
- Vehicle insurance
- Vehicle package policy
- Health insurance
Taxes, Memberships, Tuition, etc:
- Tax deadline (personal/business, homeowners/landowners)
- Membership/yearly/bi-yearly fees
- RRSP or other investment contribution deadline (if contributing)
- Tuition fees/ installments
- Other large/not regular payments that you pay each year
When you have a really good idea of when most of your payments are coming out, it is a lot easier to budget accordingly, because you know what is due this month and what is coming up.
You Need to First Track Your Spending Before Creating a Budget
Before you ever sit down to create a budget, you need to take action on what needs to happen first, you need to be tracking your spending.
The most common category that women are spending way more money in than they think or would like to admit out loud, is on eating out and groceries. I have a whole blog post about 11 Ways to Save Money on Groceries that you can read here.
When we aren’t tracking our spending, we often think we have an idea of what we are spending or what our expenses are, but 99% of the time, your spending is not what you think it is when you sit down and analyze it.
I suggest tracking your spending in a way that feels good to you, for 1 month before you create a budget. Then, to keep tracking it as you go along because that one month really is just a snapshot, so if you keep tracking it, your budget can get more and more accurate.
It is all about the planning. I had a great coach once tell me, “make sure to set yourself up for success.” Being organized, tracking and planning are the tools that will set you up for financial success when it comes to budgeting.
Take into account all of those costs that are not the typical ones that you think of when you are writing down your budget. Include the transactions that are being made from your debit account, credit cards and what you are paying in cash as well.
Creating Your Budget this Way will Increase Your Success with Budgeting
Total up how much money you spent in each of the categories from your first month of tracking, to use to create a rough outline for the next month when you are going to create your budget. I say rough outline because that first month of tracking is just a snapshot, each month is different and has additional or fewer expenses than the previous month. So, use the information you gathered to create a rough outline and then write down what you know the next month is going to include, so you can add those additional expenses into the budget for that month. Each month’s budget should be adjusted because like I said, every month is different.
Create Your Budget Based on Your Pay Periods Not Monthly
One of the reasons why it is so hard to succeed with budgeting is because you are just looking at the overall month. You do need to look at the month as a whole, but you also need to break the month down to match your pay periods, unless you only get paid once a month.
Budgeting based on your pay periods, makes your budgeting more accurate, easier to understand the cash flow coming in and out and it makes it easier to really evaluate your financial situation.
This way, you know how much money in income you have and what expenses during that time that you have, instead of just monthly income versus monthly expenses, which can make balancing and understanding your budget, more difficult.
Let’s say for example, you get paid every two weeks, when you know your income and expenses that are coming out for that two week period, you have clarity in the amount of “free” money that you have to use for spending. When you have this clarity, you have the awareness that is needed to make sure you are not spending outside of your budget, and so you know exactly how much you can spend, but still pay all of your bills, have spending money and reach your goals at the same time.
Budgeting Isn’t About Being Perfect
A mindset that I often see when it comes to budgeting is that you have to be perfect or your budget isn’t working. I want you to know that your budget is not going to be perfect, it is all about the process. Many people have tried budgeting but given up because “it didn’t work for me” or “I couldn’t do it.” I want you to know that it is something you are always working on and you aren’t magically supposed to have everything balance perfectly when you first begin. It takes practice, time, consistency and patience.
If you are struggling with Staying Motivated when it Comes to Paying Off Debt and Saving Money, you can read my post where I share my best tips with you here.
Money management is a skill, just like anything else. So put the time and effort in by diving deeper into your finances and practicing. When you first begin anything, you’re not an expert and you wouldn’t expect yourself to be, your finances are the exact same, so give yourself some grace and credit for taking the actions and putting the work in!
If you want someone to help walk you through these steps and to keep you accountable to improving your finances and ending your money struggle, check out my Financial Services that I offer. I work one on one to help individuals and couples manage their specific financial situation and to improve their lives by walking them through HOW to change their financial situation, step by step.
Want to find out where you really stand financially? Watch my Pyramid of Financial Clarity video to find out!
Other Content You May Find Helpful:
- How is a Financial Coach Different than a Financial Advisor?
- My Story & Why I Became a Financial Coach, Not a Financial Advisor
- How to Improve Communicating about Money with Your Partner
- 9 Things You Are Spending Way More Money on Than You Think
- 3 Real Reasons You Are Overspending & How to Overcome It
- 13+ Ways to Increase Your Energy to be More Productive & Earn More Money
- How to Have Better Sleep so You Can Make More Money
- 10 Ways to Reduce Your Anxiety About Money
- How Your Financial Stress is Truly Affecting Your Mental Health
- Top 8 Best Books for Overcoming a Financially Scarce Mindset for Women
- How I Lost 10lbs from Working on My Money Mindset
- Frequently Asked Questions about Financial Coaching
I am very active on Instagram, follow me here for more financial tips & tricks: http://instagram.com/mandyythomas (@mandyythomas)
Do you have any questions or anything to add? Leave me a comment in the comments below and I will respond back to you!
How have you felt when you have tried budgeting in the past? Were you successful with it or did you struggle? Leave me a comment in the comments below and I will respond back to you!