I had an on-paper (well, on-Excel) budget for years, but I still got further into debt and still always felt out of control of my money. I felt like it was more hassle than it was worth. What was the point if I was still always going to be broke?
Budgeting didn't work for me for many many years.
So I get why most folks are reluctant to try it or why they say it doesn't work or doesn't matter. I've seen with own eyes that it didn't work.
Fast forward to today and I have a budget that really works. It's not that different and it's based on the exact same Excel spreadsheet I've been using for years. What's the difference?
Let me tell you why budgeting didn't work for me before.
1) Inconsistency -
Nothing will "work" for you if you don't use it, right?
My first mistake with my old way of budgeting was that I didn't check in enough.
I used to check my budget once a month-ish. I'd throw in some general numbers at the beginning of the month and then get frustrated when I returned three weeks later and it had all gone to sh*t.
It doesn't make a whole lot of sense, does it? You spend money all month, why would it make sense that you can't check on your budget all month?
I have friends who balk at the idea of constantly monitoring their budget. To that I say "Well....is your way really working for you?"
Fix: If you want a budget to work for you, you need to be in it at least once week. Probably more. Today, my budget is working for me, and I honestly check it almost every morning, but that's because I'm a little crazy. I enjoy updating it, and it takes me about 5 minutes in the morning while I drink my coffee.
2) Fake Numbers -
My old budget didn't work for me because I didn't use real numbers.
I would throw in a rounded version of my income. And then I'd put the major bills that I knew I had every month.....rent, phone, electricity. And I rounded those too.
I didn't use all my expenses. I didn't put in gas or entertainment because how do you estimate that? I didn't put groceries because that was always different.
So my old budget was the vague, incomplete picture of my finances.
Fix: Use real numbers. Every month type in exactly what you paycheck is for, exactly what your electric is going to cost you. You can start your budget by estimating things like gas and groceries and then refine those numbers each month as you learn what your actual expenses are. Place EVERYTHING in the budget, and adjust it as your REAL numbers change.
3) An Incomplete Picture -
As with #2, using fake numbers, the next culprit in bad budgeting for me was not using ALL my numbers. I list everything that I spend on every month.
My natural gas bill is generally reeeeeeally tiny in the summer. Some months it's nothing at all. So I just didn't put it on my budget ever. How dumb is that! It's money I'm going to spend, why wasn't I listing it? Same with going out....I just assumed I'd use my "extra" money for that. Except, my "extra" money was also going to gas, groceries, and all the items I spent on monthly but didn't actually list.
Fix: Sit down and put down a budget that includes EVERY LITTLE THING you spend money on. Netflix, coffee, extra trips to the store for ice cream, school supplies, Christmas savings.....LIST IT ALL. EVERY MONTH. Over time, you'll figure out ways to condense and refine your budget that include all your actual expenses.
4) Not Sticking To It -
For me, my old budget was more of a footnote of life. I'd make a list of most of my expenses and a rough idea of my income and at the end of the month I was still almost always in the red. And that's depressing! Who wants to look at that every month!
So I didn't. It wasn't "working" so I didn't update it. I'd go months without looking at my budget.
Fix: Look at your budget like a map. If you're like me, the point of the budget was to get me out of my financial hole. Well, I needed a map. How do you use a map when you're in a strange place? You use it! All the time! You don't just look at it once and go "Oh yeah, I can get there". What happens at that fork in the road? You don't just guess cause you'll end up lost.
Think of your budget as your map to get to a goal. For me, my goal was get to the end of the month with some money left over. My budget is my guide to get there. It tells me things like "Don't turn into that department store! You can't spend money on that stuff" or "You're on your path to having an awesome Christmas...keep going this way!".
Like anything in life, it won't work if you don't use it. If you want your budget to work for you, you've got to visit it often, even when it's hard or uncomfortable. Don't let the down turns of life make you get off your path and get lost.
Budgeting is working for us now. Check back for my next entry where I'll share a sample of our budget and tell you how to make it work for you.