Do you budget? I use a budget on and off throughout the course of the year. But I can’t say that I’m religious about using one. I primarily just track my spending using something like Mint.com. But once or twice a year I will turn to an actual budget to clamp down on spending.
Budgeting for the long term is hard (for me at least). Many people start a budget and quit, thinking they’ve failed. But I say your budget only failed if it didn’t help you move the meter a bit closer to meeting your financial goals. According to Your Money: The Missing Manual, a book by J.D. Roth, there are four reasons why budgets fail:
1. It Was Too Complicated
Your budget can be as detailed and as automated as you want it to be. If you want to focus on just a few spending categories, that’s fine. If you want to just do it with pencil and paper, that’s okay too. When I do a budget, I focus on just my dining out category. I know that’s where I tend to overspend. And if I want to limit my spending for the month, that’s where I should attack. Some people swear that a zero-based budget, like the budgeting software You Need a Budget provides, is a simplest way to go. Find what works for you and stick with it.
2. It Didn’t Align with Your Goals
A good budget will help you achieve your goals. If your budget doesn’t specifically reflect your end goals, then you are likely to miss the mark.
3. It Was Impossible to Achieve
Your budget needs to be based in reality. Make sure your budgeted categories aren’t extremely different from your past spending. Otherwise, you’ll just serve up a big dose of disappointment for yourself.
4. It Wasn’t Fun
Finally, budget shouldn’t be about only limiting your financial life. It should set you free and include a little fun. Make fun savings goals (i.e. vacation, holiday spending) a part of your budget. And be sure to include those splurge expenses too.
Do you have success with budgeting every month? What’s your secret?