It occurs to me that while I’ve said many times that you need to write a realistic budget that reflects your priorities and I don’t think I’ve explained why. Doing your budget with no regard for your real life spending is a recipe for disaster. If you are wondering why your budget isn’t working it’s because it is not realistic.
What is a realistic budget?
In the Budgeting for Beginners blog post we covered how to budget. In short you gather your real life numbers as accurately as possible and use them to prepare your budget. Your budget shouldn’t necessarily be what you would like to spend but what you can afford to spend.
How does that make any sense?
Say your shopping costs on average €100 per week. It is madness to assume you can afford to spend €30 on food unless you have a lot of food in the house that needs using up. You can not afford a budget of €30. Yes you have the money but no it won’t work because you will not stick to it. You will end up in the shop, many times in the week, picking up one or two things to tide you over but coming home with a bag full each time.
So how do you decide what you can afford?
Picking a random number out of a hat and allocating it to a category will never work. You need to know what your average spend is. If it is a new category to your budget like swimming lessons then you need to do research prior to adding it to your budget.
Is there another reason why your budget isn’t working?
You’re not sticking to it. If the numbers are accurate and the budget still isn’t working then it’s not the budget at fault. Are you emotionally spending? That is spending money based on your emotions. Buying yourself a new jacket because you got a new job and deserve a treat. Buying plane tickets because you’re going through a break up and spending makes you feel better. Learn to recognize your triggers and avoid them as best you can. If you can’t avoid them find a new way to cope with them like going for a walk on the beach.
Another reason why the budget isn’t working is you’re not checking in with it. You made the budget at the beginning of the month and never looked at it since. You’re going on memory and guess work. You need to be checking in with your budget at least once a week.
For the next 6 weeks track your spending. See if it aligns with the amount you budget for each category. Check in with your budget at least once per week every week and see for yourself if it’s any easier to stick to your budget.