What to do if you budget didn’t work out well
I am an accountant and love the details, sometimes too much. This was a real problem when I first setup my budget I wanted to break apart all my transactions to make sure they were categorized just perfectly. I realized that I would have dozens of categories and having that many categories wasn’t helping me be more frugal. So I recommend starting out with these simple categories:
Simple Categories:
Housing (Rent or Mortgage)
Transportation (Car Payment, Gas, Insurance, Repairs)
Food (Anything purchased at a grocery store)
Savings (All savings)
Miscellaneous (Everything else)
The key to making a budget work for you is to be consistent. The best way to stick with it long-term is to spend just a short amount of time working on it. Don’t spend more than 20 minutes on the budget at one time. I know when I would originally would put my budgets together I would spend hours setting it up and re-evaluating it. I felt exhausted when I was completing it that I didn’t take any action steps to actually solve my financial problems.
Don’t Cut Spending
Cutting spending is unrealistic. When people set a budget they tell themselves this is all I’m going to spend on this category and I won’t go over my limit. This might help if you are very excessive spending, but most people probably believe that they are pretty frugal. I think the goal should be to seek alternative opportunities to spend.
I used to eat out once or twice a month and realized that was too much. I started to think about why I like eating out and determine that it just tastes better. I started to spend more money on buying some nicer things to eat at home. If I just said, I’m not going to eat out anymore, I might have had some short term savings, but it’s a life style I was not prepared to live.
Tackle one area at a time
Since you are only spending 20 minutes on your budget you should only be tackling one area at a time. Think about your housing, maybe you could get a roommate, maybe move, or rent a room as a storage unit. Think about groceries, maybe buy a cheaper brand, eat everything on shelves, or go shopping less often. Small frugal step can make a huge difference.
Take a deep breath and get back on the horse
If you have fallen off track take a deep breath. No one is perfect just getting back on the horse.