Family budgeting remains a sound financial advice. If you want to have control over your expenses and prioritize your saving plan, the place to start is budgeting. So, Why do budgets fail to work?
Here are four common budgeting mistakes that causes budgets to fail:
Mistake # 1: Negative Attitude
Your attitude towards budgeting will determine if you will succeed. If you think of budgeting in negative terms (such as financial handcuffs, restrictive, penny-pinching, or a sacrifice), you are more likely to fail. A positive attitude means you think of a budget as a means to an end (a way to achieve your dreams and goals).
Mistake #2: No Written Plan
“If you fail to plan, you are planning to fail!” – Benjamin Franklin
A written budget will help you track your expenses, where the money is going, and when your budget needs to be revised.
Mistake #3: No Budget Monitoring
Many times budgets are prepared, stored and forgotten. A budget should be monitored on a regular basis throughout the year: quarterly or monthly. Budget monitoring will help you identify problems before they become a disaster.
Mistake #4: Unrealistic Expectations
What do you expect to gain from a budget? This is a question that many financial advisers fail to ask their clients. However, starting a budget without having a positive attitude, monitoring, and realistic expectations, will most likely set you up for failure. For example, if your grocery costs are $600 a month, then budgeting $400 as a way to “save money” on paper is not realistic. If there is room to save in groceries, you must do it. However, reducing the expense line items arbitrarily won’t provide realistic results. Also, If you set your sights too high, you only become discouraged when you fail to reach them. While it is admirable to try and accomplish great things, you need to set goals that are challenging, yet realistic.
Are you making any of these budgeting mistakes? What are some of the challenges you experience? Share what you think!