Last Updated on: September 30, 2023
Budgeting is fairly simple. You just put a name to every peso you earn every single month, then spend only the amount allocated for each account. Simple, right?
However, if you’re a beginner, you’ll immediately realize that no matter how much you try, your budget never seems to work.
This is because we often look at budgeting as an oversimplified idea without realizing that it will require time, effort, and discipline – a lot of it before you can make your budget work.
Here are ten possible reasons why your budget is not working.
Table of Contents
1. Your Budget Is Not Realistic.
If you’re new to budgeting, there is a chance that your budget is unrealistic because your current income is unlikely to be enough to cover the expenses you wrote on your budget.
When I was in my first job, I earned around P18,000 (net income), and I already had my budget. However, no matter how much I tried, I was always short every payday.
Later, I realized my budget was unrealistic because I included expenses outside my income range or allotted a smaller budget than needed.
So, if you’re earning around P20,000 per month, but your actual expenses are P22,000 per month, then you’re already P2,000 over your budget.
If this happens, no matter how hard you try to make your budget work, you will always fail. So ensure your income is more than your expenses so you’ll not fall victim to the debt culture.
2. You’re Not Tracking Your Spending.
Another reason why your budget is not working is because of your unchecked expenses. Because of this, tracking your expenses is an important habit to complement your budgeting.
Tracking your expenses for a couple of months gives you a better view of how much you need for each budget category.
For instance, if you spend around P8,000 per month on your allowance (mainly for food and transportation), yet you’re only writing P5,000 on your budget, you will fail.
But if you keep track of your expenses and carefully audit your necessary and unnecessary expenses each month. Your budget will be in better shape.
3. You’re Not Sticking to Your Budget.
Sticking to your budget is one common reason it doesn’t work, even if you think it should.
It’s easy to go beyond your budget because of unexpected expenses, especially if you don’t have a buffer fund.
So, relating to making your budget realistic and tracking your expenses, you must commit to sticking to it, even if it means skipping some events, not eating some food, or waiting a little longer to buy something.
It would be tough, but the discipline you’ll build along the way will make up for it eventually.
4. You’re Not Adjusting Your Budget As Needed.
Our budget should not be static. It must be dynamic. Our budget is not something we only do once and let it be for the rest of our lives because our finances will surely change.
There will be additional responsibilities that will require cash, especially if you start a family. However, there will also be an increase in your income as your business or career progresses.
The goal is to adjust your budget according to your goals. You can do it every year or when you reach a significant financial milestone like a job promotion.
5. You’re Not Making Saving a Priority.
Whenever you receive your money, you have to put a name on them, particularly your savings.
Depending on your budget and current capability, you should aim to save how much you can while building the habit of saving until you reach at least 10% monthly savings.
Though this is not a hard rule, it is still beneficial to have a target amount to save and not just put whatever is left after you spend.
6. You’re Not Using the Right Budgeting Method.
There are various budgeting methods out there, like:
- 70-30 Rule (70% needs, 30% wants)
- 70-20-10 Rule (70% needs, 20% wants, 10% savings)
- 50-30-20 Rule (50% needs, 30% wants, 20% savings)
- 50-30-10-10 Rule (50% needs, 30% wants, 10% savings, 10% giving)
- 40-30-20-10 Rule (40% needs, 30% wants, 20% savings, 10% giving)
However, you can’t use them all because it may not be the best method for you, but you can try each to identify which works best for you.
But remember, you must first identify how much you need every month to pay for your necessities, like food, transportation, utilities, and rent before you can realistically set your percentages.
7. You’re Not Using Budgeting Tools.
You can use different budgeting tools in many ways today, but the two main classifications are manual and digital.
When using the manual method, you use a traditional pen-and-paper to track your budget, which can sometimes be cumbersome and inconvenient. This is where digital comes in.
When using digital budgeting tools like spreadsheets or mobile apps, you can conveniently look at the bigger picture of your financial status, especially if you have graphs and charts.
A digital budgeting tool can help you stick to your budget, especially since you can add alarms and notifications when approaching your preset budget limits.
8. You’re Not Getting Help.
Budgeting may be a little bit more difficult for some than for others. So, if that’s your case, it would be a great relief to find someone to help you.
Generally, the Internet is your friend. There is a lot of information you can find that you can apply. But if you’re looking for a more specific approach, a financial planner (not an insurance agent) will be your best hope.
So if you find someone to help you with your budget and financial goals, you must be honest, so you’ll develop a working budget that you can stick to.
9. You’re Not Motivated.
To be fair, budgeting is not the best thing you can do on the weekend after you receive your salary. However, some genuinely enjoy budgeting.
But if you don’t feel motivated to budget, you’ll need to find ways to make the habit more rewarding so you can stick to it longer.
You can buy a small treat after budgeting, like an ice cream, or you can do your budgeting in a café where you can focus more. Just remember that the goal is to enable yourself to be motivated with budgeting.
10. You’re Giving Up Too Easily.
Lastly, one of the most common reasons your budget doesn’t seem to work is that you quit easily and never give your budgeting habit some time and discipline to stick.
In some instances, you may have tried one budgeting strategy for a week, told yourself it doesn’t work, then moved on to the next strategy.
Week after week, you just change strategy. If that’s the case, your budget habit will not stick. Remember that budgeting requires time before you’ll get the hang of it.
Here are some additional tips for budgeting success:
1. Start small.
The key to a successful budget is to avoid overwhelming yourself by starting small changes in your personal finance, like tracking your expenses.
The truth is it will take some time before you can almost automatically do your budget. Don’t expect to master budgeting overnight.
2. Be realistic.
As I said in the first reason, you must make your budget realistic. Avoid adding spending categories that you don’t have the money to spend for.
If you know you can’t afford to pay for a gym membership, you should remove it now and try to exercise at home or in your office gym.
The key to making your budget realistic is being honest with yourself. Also, don’t be too hard on yourself while starting. Start with small, achievable goals.
3. Be flexible.
Your income and expenses will eventually change for various reasons, like a job promotion or a, job loss, inflation, and more.
That’s why it’s crucial that you continuously review your budget and adjust it as needed.
4. Make it fun.
Budgeting can be boring, overwhelming, or frustrating at times. Still, you have the power to make it more fun and enjoyable.
You can reward yourself, include budgeting as a monthly date night with your significant other or even gamify it.
Final Thought
Budgeting is a crucial aspect of our personal finance, but it is often neglected, resulting in failure.
The key to an effective budgeting strategy is personalizing it so you will be compelled to stick to it more.
If you’re new to budgeting, start small, but if you already have a budget that is often failing, you must re-strategize.
