Budgeting Lesson 5 - Why does a Budget Fail?

Jessica
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Many people try to make an honest budget. But they often get depressed and give up as they are not able to achieve any financial gain.

Some of the primary reasons for a budget failure are:

Cause 1 - Negative Attitude

Generally speaking, a positive attitude will help you win half the battle, and budgeting is no different. If you are not confident of your plans for budgeting, then you are bound to fail with the budget.

Other Budgeting Lessons

A positive attitude means that you take a budget as a way to achieve your financial dreams. Do a bit of attitude test before you start budgeting.

Cause 2 - Lack of Motivation

Are you budgeting in order to satisfy debt repayment plan or complying with an agreement made in a bankruptcy court? These are not bad motivations but surely, a kind of external pressure that is forcing you to prepare a budget, and these pressures are bound to ease out sometime. For a successful budget, the best motivation should come from within yourself.

Cause 3 - Unrealistic Expectations

Do you expect that setting up a budget will reveal large amounts of hidden cash or it will magically transform your spending habit after a month or so of tracking your expenses?

The reality is that budgeting is helpful for those who stick to it. You should not expect miracles. What you can expect is a steady and measurable progress towards the financial goal that really matters to you.

It's better to avoid negative attitude, lack of motivation and unrealistic expectations so that your budget does not fail and you are able to manage your finances.

Last updated on January 16, 2013

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Zeal_Deal

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Post     Post subject:

You have mentioned some of the key points that are needed for successful budget.

Even I had problems with my budget due to the negative attitude. But now things have changed.

Great going Jerry!!

Zeal_Deal
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Mini Profile  helping_user
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Post     Post subject: Re: Why does a Budget Fail?

Hi Jerry,

It's really a good topic you have started. Maximum of us doing lots of mistake while budgeting. I want share few more reasons that causes mistake:

  • Impractical Projection: If you are determined to make your budget workable, then you have to be practical. It might be more practical to cut back the amount you spend rather than to totally remove these kinds of expenses from your budget.
    Tip: Try to reduce the amount you spend on the luxurious item rather totally removing it from the budget.

  • Not having any written proper plan: A written planning will not only help to keep track but also help to evaluate the current situation.
    Tip: Start preparing a written plan budget for each month. After the period 3 months, evaluate yourself how well you can handle the budget.

  • Forget to mention the item while preparing budgeting list: Its quite normal that some time we missed to list some items like Gifts for birthday or any other occasions, insurance premium, club or association dues etc.
    Tip: It always better to pull out the calendar while budgeting and list all the occasions will be coming up in the next month. So that you set a budget for gift purchase or other related expenses.


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Mini Profile  Jessica
Jessica
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Post     Post subject: How to prevent a budget failure

Most people try to prepare a budget but few of them are successful in it. This is because very few of us are able to plan a budget that can be implemented successfully.

Take a quick look at the steps given here to avoid budget failure.
  • A primary reason behind budget failure is people failing to find out exactly where they are spending their money each month. It's better to write down your daily expenses in a spending diary instead of putting down how much you will save.

  • Once you can track where your expenses are being made, you need to reduce the expenses which you need not make or those which cost you more than the expected amount.

  • Usually most people have a number of costly habits which often do not seem to cost much daily but when added up can result in a lump sum amount. So, instead of reducing expenses on regular items, people should get rid of the costly habits.

  • Another way to prevent budget failure is to plan for expenses for which most people fail to prepare. Such expenses are those on health insurance, taxes and unexpected expenses on car repairs, big purchases or hospital treatment.
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phinhero

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Post     Post subject: define buget for me

please define what budget is
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Mini Profile  blue
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Post     Post subject:

Hi,

Welcome to the forum Phinhero.

Please go through this article to know about what a personal budget is and how you can effectively monitor your spendings and expenses by creating a planned budget: Basic guide on personal budgets

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Mini Profile  allan




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Post     Post subject: RE:

Hi,

In simple words a budget is a list of all your income and expenses. It is a detailed plan of expected income and expenses over a certain period of time. It is very important that you maintain a budget for financial stability. A budget can act like guideline for your future expenses and investments.

You can see some budgeting lessons on the first post of this page which will guide you on your budget.

Thanks,

Allan
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Lee

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Post     Post subject: Budgeting

Most budgets fail because the effort needed to contantly monitor and document a confusing and ever-fluctuating detailed money rail leaves most people bewlildered...and they haven't even got to the budgeting part yet.

This money trail is called cashflow. With that said, controling and streamlining your cashflow eliminates 95% of your money managment headaches. It's not rocket science. I figured this out close to 20 years ago and have documented it. I call it "The B Word" and you can find it online.


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Lee
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liz

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Post     Post subject: budgeting

what are 10 ways of bugeting effectively?
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Mini Profile  jerry
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Post     Post subject:

Hi Liz,

The basics of a simple budget is to control your spending power by restricting your expenses up to a certain limit with respect to your affordability.

One needs to add up the daily expenses by preparing a list first of all. Then one can note whether he has spent more on a particular item or for a certain purpose as compared to the amount he has allotted for that item.

You can read through some of the discussions that this community has started. Just refer to the discussions on How to Plan your budget and Need help on Budgeting for the effective ways of budgeting.

Thanks,
Jerry.
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Mini Profile  ldy_therese




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Post     Post subject:

Budgeting is a tough task. I also used to make unrealistic expectations which ended up to disappointments and debt mishandling. However, I suggest an effective way of keeping on track with your budget. Simply, live with in your means. Take note of this each time you spend your money and limit your expenses to what you can really afford.

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