Making a budget and sticking to it are two of the most important financial practices to follow. However, when you fail to do so, it brings forth some challenges. So if you think your budget isn’t working and you can’t figure out why we are here to solve the problem! Take a look at this article to learn about the common reasons why budgets fail and how you can rectify the errors to make the budget work for you.
- Impractical budget:
The main reason why a budget fails is that it is impractical. Everyone wishes to save and have a huge bank balance at the end of each month. But given the financial responsibilities, you have and the rising cost of things, it becomes impossible for you to save a large chunk of your income. This is why you need to have a realistic budget that would have provisions for all your expenses, and also leave some room for fun. You may not save a lot, but even if you can follow the small savings plan, you will become successful in budgeting.
- No self-control:
Sticking to your budget requires self-control. You need to know what your financial capacities are and then move forward. If you have a monthly leisure budget of INR 5000 and you have already spent that, avoid buying the 3D movie ticket for INR 800. You can watch the movie at home. If you can’t practise self-control, you won’t be able to stick to any financial plan.
- More fluff, less sense:
When making the budget, you only focused on using the latest technology, used a fancy app or simply made your budget bright and colourful. As a result, you used up all your energy on fluffing it up and what was inside it made no sense! Avoid this and make a practical budget. Even if you handwrite it on a small piece of paper and stick it to your refrigerator, it will work. Focus on the facts, not the show.
- Too rigid:
Budgets often fail because they are too rigid. You need to accept the fact that in some months, you won’t be able to stick to your budget and in some months the expenses will be lower. Life is unpredictable and so you need to have a flexible budget for it to work on a long-term basis.
- Lack of emergency funds:
If you do not have provisions for an emergency fund in your budget, your entire financial plan will fail. Have an emergency fund as doing so will allow you to stick to your budget in an efficient and disciplined way.
If you have been making these mistakes, you probably are in a financial mess! But do not worry, now that you know what the errors are, you can start working on them and make a better budget that would actually work for you. Get going and see a change in your financial health.