I use a budget for our everyday lives, mainly to check that we are staying on track and are meeting our goals. Most of the time, I am very rigid and thorough with our budget; only occasionally do I slack with the inputting of numbers and reviewing as the year goes along.
But, there are a lot of people who struggle with budgeting. They start with the best of intentions, working out the different sections of their budget, what money should be allocated to which section and then set out on their new journey. It feels quite exciting at first, like they are finally in control of their own finances, but come the end of the month, something has gone horribly wrong.
We have all been there. You get to the end of the month and you have no money. Suddenly the bank account that was looking alright-ish is not at all. What has gone wrong? Your budgeting has.
There are three mains reasons why people struggle with budgeting:
1. Outgoings exceed incomings. This one is an obvious one as to why someone would struggle to balance the books, and needs looking at immediately. For every month you continue down this path, the more debt you add to the pot. Then begins to horrible cycle of not enough money which becomes increasingly difficult to break. If this is why you struggle with budgeting, then stop, sit down and work out why your outgoings exceed your income each month. This probably deserves a post by itself, but you need to make sure the amount of money coming in covers the basics, then add on where necessary.
2. Their budget is too tight. If your budget is so tight then there’s about a 5pence difference between income and outgoings, you will struggle, for the simple reason that if one single thing doesn’t go to plan, you will be in trouble. There is about a £100 difference in our budget, so that if something unexpected crops up, we have the funds to deal with it. If your budget is so tight there’s no breathing room, then re-assess just what needs to be in there.
3. They are no honest with what they spend. This is a big one, and often the hardest to work in, as it means being totally transparent with your spending. There is no point having a budget which doesn’t factor in all those miscellaneous spends, as we all know they add up! Some budgets have a “fun” spending category. All of our finances are combined, so our misc. fund is those little additional extras which don’t really belong anywhere else. This only works because both me and my husband are totally transparent with our spending, and if there needs to be a bigger spend for whatever reason, we discuss it first.
I’m not going to lie; budgeting can be hard. It can be a drain, especially having to remember all the numbers and thinking about the different sections and what should go where. But, budgeting, in my opinion, is a key factor in financial success. If you know how much is coming in each month, how much goes out and on what, then you can work your goals around that, and tweak your spending so that you can reach your goals even faster. Knowledge is also key; you need to know your budget inside and out if it is going to work!
Willpower is also key. Do you really need that new handbag/shoes/football shirt (insert whatever else here) that costs £XYZ? 9 times out of 10, probably not. Exercising willpower when spending is also key to a successful budget. Easier said than done though! But, as we are aiming for a more simple life, the consumerism side of things should be diminishing, so this should get easier over time.
Do you struggle with budgeting? What do you find hard?