Why Your Budget Could Be Setting Up to Fail
At any age, no matter the income level, amount of expenses or debt, it is important to have a budget, not only for making sure monthly expenses are paid on time, but to reduce unnecessary spending, and increase contributions to savings and retirement accounts. Whether you have just now this year made it part of your New Year’s resolution, or have avoided so far since you started your career, you are not the only one. According to a recent Gallup poll, the study shows that only one in three American households have a budget, which means that two thirds have no plan at all. It is never too late to plan for your future, and the longer you wait, the further away you are from security a financial future, so it is important that you create a budget right away. Now for those homes that do have a budget, it does not mean that it will work, it just means that there is one, so while you are setting yours, make sure you are set up for success. There are so many ways to track a budget now, such as using Excel or applications on your phone, so make you learn about best practices for software testing and tools before you decide on one which fits your needs.
Following a budget does take a lot of discipline and planning, and much like starting out the year saying you are going to lose 20 pounds, then quickly the gym visits decrease, the diet goes away, and go back to your normal ways. Same goes with budgeting, specifically making sure you are not set up to fail and following it. Figuring out a successful budget is planning, to the best of your ability, all expenses in an entire month. This would be all debt obligations, utility bills, while factoring gas, food, and entertainment spending. The most common reason for a failed budget is that it is not realistic, so make sure you allow for adequate spending, even factoring in events such as birthdays, holidays, or other social events that you know you will be spending money on. Start small, maybe eliminating eating out or limiting to a few times a month, focusing on eating at home and packing lunch to take to work. You actually will not believe the savings in just eating what you have from home. If you do plan on going out, even eat before you leave an order an appetizer, it will still save more than ordering an entire meal. If you are going to the bar, have a few drinks at someone’s house before you go out and go out later on, saving on the $8 drinks. In the end, overspending is what causes a budget to fail, so you really have to be committed to reduce unnecessary spending so you do not dig yourself further into a hole each month. Stop using the credit cards, save money where you can, and enjoy seeing your savings account increase.