Creating and sticking to a budget is hard. There are lots of quick tricks and tips that people use to get a hold of their finances, like no spending challenges or ripping up credit cards and only using cash, but without developing a sound framework, these tricks quickly disappear. Once you have your budget in place, sticking to it is the real obstacle. It is important to keep your end goal in mind of saving money and not be derailed by what is happening around you. In this article, we will discuss the reasons WHY budgets fall apart.
- Social Media Influenced. Seeing the lavish trips or extravagant lifestyles of friends and family can make us crave what we don’t have. Remember that what you see in the pictures may all be on credit or maybe that person saved for years to buy that new car.
- Impulse Purchases. Buying a new flat-screen TV just because it is on sale or tickets to a concert can blow your budget out of the water. If these are purchases you would like to make, plan ahead and incorporate them into your budget. It may require spending less that month on eating out or other entertainment.
- Budget Creep. Many people set their budgets but don’t pay attention to them during the day, week, or month. For example, if you find yourself eating out a lot one week because you are busy during dinner hours and don’t have time to cook, then you need to sit with your budget and figure out how you will compensate for that discretionary spending. Will you scale back on your monthly clothing allowance that month?
- Forget to Pay Yourself First. When creating a budget, many people consider savings like an emergency fund or 401k as the last thing they should do after paying all their bills. The reality is that they should be setting aside money for a rainy day or retirement first. This is your safety net when things happen beyond your control. By automating these payments to yourself, you take the guesswork out of how much to set aside each month.
Budgeting takes the guesswork out of how and where you spend your money. It helps develop control over your finances and keeps you informed of where your money is going each month. Contact us for more information.