You’ve heard it before from countless financial experts. If you want to be successful with your cash, then you need to learn how to manage it properly. That means having a plan in place that tells you wherever every penny and pound from your wages needs to go each month.
Unfortunately, while many people extol the benefits of budgeting, they don’t often admit to the fact that sticking to these guidelines can be easier said than done. Just because you tell yourself that you’re going to put a portion of your wages into your savings account each month, doesn’t mean that you’re not going to ignore that rule when you see something you want.
If you’re asking, “Why can’t I stick to my budget?” the following reasons may answer your question.
One of the biggest mistakes that many people make is creating a budget that just isn’t realistic for them. For instance, you may decide that you want to spend around £200 a month on food shopping, instead of £300. However, if you’re buying for a large family, then you may not be able to cut down by that much. You need to think about your expenses from an honest perspective and ask yourself what you can really afford to cut back on.
Remember, being realistic with your budget also means making some room for fun and freedom in your plan too. You don’t want to slash your spending on categories like entertainment and eating out if those are the things you love to do. While you might need to compromise on how much you spend on those areas, try to avoid removing too many enjoyable things from your budget too quickly.
Another reason why you might be having problems with your budget is because you’re just not disciplined enough. For instance, if as soon as you get your pay at the beginning of each month, you splurge it on things that you don’t need, then you’re going to be left with nothing to spend on your essential bills and expenses.
The best way to deal with this problem is to put strategies in place that will help to increase your discipline. For instance, make sure that all of your essential expenses go out of your bank at the beginning of the month, straight after you get paid. This will mean you’re less tempted to spend what you don’t have. You could also think about paying for the things that you want in cash only. If you don’t take a credit or debit card with you whenever you go shopping, you’ll need to return to the house to get more money, which is something you’re unlikely to do if you’re just impulse spending.
In an ideal world, we’d all buy what we wanted immediately, without worrying about the consequences. However, that’s rarely the case for most people. Instead, you need to actively think about how you’re spending your money, and how it’s going to affect you in the long-term. For instance, spending £100 a month on take-out food isn’t going to have any positive impact on your future finances or your health
Eating food that someone else makes might save you time in the short-term, but so would being prepared and planning your meals in advance. On the other hand, sometimes thinking about the big picture means knowing when to spend money in a different way. For instance, instead of waiting 2 years to buy a car that you can use to travel to a better paying job, taking out a loan would allow you to get that career quicker. Although you’d be spending more cash initially, you would also reap more benefits too.
Just like missing the big picture, failing to think about crucial categories in your budget can also get you into financial trouble. With that in mind, consider sitting down with a friend or member of family, and asking them to go through your budget with you. Talk to them about all of the categories that you want to cover and see whether you’ve missed anything out.
Many of us remember to budget for essentials like food and mortgage payments that show up on a regular basis. However, you might be forgetting about bi-annual expenses like car maintenance, or repairs for your home. Figuring out what you’re missing will save you from a nasty surprise in the future.