Article: 6 Reasons your Budget Stinks

[smiley]

I know not everyone is a fan of Dave Ramsey but this is a decent article.

www.daveramsey.com/blog/6-reasons-your-budget-stinks




6 Reasons Your Budget Stinks (and What to Do About It)
One of the best things about the budget? It’s math.

Math haters and Free Spirits, keep reading!

Math is black and white. There’s no gray area.

You want to know why you’re spending $400 more than you make every month? It’s all there in the numbers. You just have to take a little time to think through it.

The problem comes when people start budgeting, make some mistakes, and then give up. That’s not a good way to deal with money management issues. The problem won’t magically disappear.

So, in the spirit of helping you make it happen in 2013, we thought we’d identify some of the issues you might have with your budget and how to remedy each one.


1. You don’t budget.

This isn’t rocket science, and we’re not trying to play some voodoo trick on you. It’s just that, well, your budget might stink because you don’t have a written, zero-based budget in the first place. So that’s where you’ve got to start. Our new free Guide to Budgeting can help.

2. You and your spouse aren’t on the same page.

If you think car loans and adjustable rate mortgages are perfectly fine but your spouse feels otherwise, then your relationship is going to have problems. There’s no way you can manage your money well when the two people who control the budget completely disagree on basic ways to spend their income. Listen to each other and come up with a plan that works for both of you.

3. You pick a number, any number.

Ever done this? Maybe you’re not sure what the food budget should be for the month. You think about it for about four seconds and decide that $500 sounds like a good number. Why? Five hundred is your favorite number. Or you’ve got 500 days until your wedding. Or you once won $500 in a raffle. These are not good ways to determine the amount in your budgeting categories. Instead, be intentional. Look at how much you’ve spent in each budget category over the last few months and come up with a reasonable number to set a baseline to work from going forward.

4. You aren’t realistic.

Maybe you don’t have a problem with randomly assigning numbers to your budget, and you do actually sit down and think about how much money you should allot for each category. But if you repeatedly underestimate or overestimate how much goes in each category, then you aren’t being realistic. Sorry, but $100 a month on food isn’t going to cut it for a family of five. Or $400 a month on shoes? On shoes? Come on!

5. Your priorities are all jacked up.

Break it down to the basics. What do you really need? After that, if you have any money left over, you can start focusing on wants. It’s pretty simple. Needs go first. Wants go second. Keep that in mind when you start the monthly budget. Electricity and food are needs, so they get added at the top of the budget. A new dining room table is a want. You can save for it using what’s left after the bills are paid. Just be sure to add a line item in the budget and tell the money where to go!

6. You have income problems.

If you don’t have a spending problem, then you probably have an income problem. Do you need a second, part-time job? Do you need to think long-term about a new career? Do you just need a job to pay the bills? Remember, this is a temporary issue. Get gazelle intense about making more money, and you can make your budget work. Once you get out of the red, you can start getting back to a normal routine. Until then, work as much as you can.

Don’t freak out when things aren’t going as smoothly as you would like. It usually takes a few months to get in the flow of making a solid, dependable budget.

Stay consistent and focused, and you will begin to see a difference in both your attitude and your bank account.

What are some other reasons your budget might stink? What will you do this month to make your budget better throughout 2013?

[Deleted]

Oh, number 3. I worked on a budget with a friend the other day. She technically made enough money to have some savings every month but never actually had any left over. I entered all the bills she was missing and was going over her household expenses. I noticed in the food budget that she had $300 for food and a total of $200 for eating out, cleaning products, diapers, co-pays, etc. This was for a family of 6 and she is pregnant. Well, no wonder you are going over every month. You have $1.67/day to feed each person.
I told her to actually look at the numbers for the last 3 months instead of picking a number that would be nice.

[Deleted]

I think the hard thing about basing your budget on your ACTUAL spending is that if you are actually spending too much, you need to pick a number you can/should spend. If I spent $700 a month on food, that doesn't mean I should put $700 into my budget for food....that means I'm spending too much and need to cut back. I personally find it helpful to set goals for each category in my budget vs. setting each category for what we have comfortably spent in the past. If we keep spending like we always have been, what's the point of a budget and how will we ever end up with anything leftover?

[Deleted]

Jan 10, 2013 17:58:34 GMT -5 @buckybells said:

I think the hard thing about basing your budget on your ACTUAL spending is that if you are actually spending too much, you need to pick a number you can/should spend. If I spent $700 a month on food, that doesn't mean I should put $700 into my budget for food....that means I'm spending too much and need to cut back. I personally find it helpful to set goals for each category in my budget vs. setting each category for what we have comfortably spent in the past. If we keep spending like we always have been, what's the point of a budget and how will we ever end up with anything leftover?

I totally agree. The husband of the friend that I helped looked at their fast-food expenses from last year. Um, $4000. What? That is a lot of fast food. I suppose they could budget $350 per month to cover this but that is over the top. It is especially bad when you are budgetting $450 for everything for your entire home and family. Figuring out how much they spent was a start and cutting it back to a reasonable amount would be a next step.

[sweetnsour]

In reference to 3, I think you have to start somewhere then look where you can cut. Otherwise you can drive yourself crazy coming up with the right number. A budget should be something that is looked at and discussed at frequent intervals.

[sillygoosegirl]

Jan 10, 2013 17:58:34 GMT -5 @buckybells said:

I think the hard thing about basing your budget on your ACTUAL spending is that if you are actually spending too much, you need to pick a number you can/should spend. If I spent $700 a month on food, that doesn't mean I should put $700 into my budget for food....that means I'm spending too much and need to cut back. I personally find it helpful to set goals for each category in my budget vs. setting each category for what we have comfortably spent in the past. If we keep spending like we always have been, what's the point of a budget and how will we ever end up with anything leftover?

But if you are spending $700/month on food, you need to *know* that. If you set your budget at $350/month because somebody told you it was an appropriate amount, you're gonna be pretty hungry during the second half of the month. You need to know up front that is half of what you normally spend. Or, maybe you don't think you can figure out how to spend half as much at the grocery store, so you need to cut your spending in another area that is less necessary. I don't think you can set realistic goals (or have a realistic chance of meeting them) without having a pretty firm idea of how your goal compares to your past spending.

[aurora]

#1 applies to us, if I get right down to it. However, it works out since #2-#6 aren't problems.

I do find it funny that electricity is listed even before food as a need.