Why Personal Budgets Fail (And What You Should Do Instead)

Why Personal Budgets Fail (And What You Should Do Instead)
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If you are into budgeting, you must have realised by now that creating budget is the easiest thing to do. The most difficult and tough task is to stick to it. But a little tweaking of your habits and thoughts can work wonders.

Picture: Doremi (Shutterstock)

Have you ever set a personal budget for yourself? Are you still sticking to it? My guess is that you answered these questions in a sequence of “yes” to the first, and “no” to the second. We all have great intentions of spending our money wisely in accordance with our plan, but it hardly ever happens that way. At the end of the month (if we make it that long), we realise that we aren’t able to follow our budget at all and we just decide to throw in the towel.

Budgeting doesn’t have to be like this though, and it doesn’t have to be a chore either. It can be both fun and can be fairly simple at the same time. In order to get you through this process and follow your budget a little better this time, let’s take a look at why personal budgets often fail.

You Cut Out The Fun

Often times, when people make a budget for themselves, they just put all of their known bills in there and set up an amount for the “food” category, but when it comes to having fun, this is left out of the budget entirely!

Sure, you might be tight on money, but you should still do your best to budget in some fun. Without any release from the daily grind, you’re going to make yourself nuts, and you’re ultimately setting yourself up for failure.

You Forgot About the “Unexpected” Expenses

There are plenty of bills that hit your account each month. These are the ones that are easy to predict, but then there are bills that only happen once every few months, or every year. Things like car insurance, registration, oil changes — these don’t pop up each month, but you should still put them into your monthly budget because you should be saving up for these expenses.

Then, there are items like your roof. It most likely doesn’t need repair for another three or four years, but when that $5000 expense comes your way, you’re going to wish that you’d been saving up for it all along.

You Have High Expectations

It takes a while to create that budget, and when you’re done you think that there couldn’t possibly be an expense that you missed and your numbers on each category are perfect. Then that first month comes and goes and you overspent your budget by $400!

You didn’t spend on anything lavishly, so how could this have happened? Well, you most likely forgot a bill, or maybe you severely underestimated that grocery bill. The point is, you will not be able to create a perfect budget the first time. For the first six months, it will just be a work in progress, and that’s ok!

You’re Using the Wrong Tools

Are you really comfortable with the tools you are using to manage your budget? Is your budget easily accessible? When you need it, how much effort do you put in to understand the current pattern and deviation? A tool is only as good as how well you use it. If you are using a professional budgeting software, are you conversant with it? On the contrary, if you are using a traditional pen and paper technique, are you keeping track of all earning and all spending? Not using a tool properly (or not knowing about the tool) is one of the biggest reasons of budget failure.

If you can get over these hurdles, you’ll be much closer to making that budget that works for you and that you’ll be able to stick with. And, once you’ve got your master budget, life just gets that much easier.

Why Do Personal Budgets Often Fail? [One Cent at a Time]

SB is a husband working as a software professional for a Fortune 100 corporation in Florida. Read more about him here and follow him on Twitter @onlyonecent.


  • A personal budget has been working for me for the last 2 years… paid off all credit card debt and have a substantial amount of savings..

    There are some good tips here, true…. but at the end of the day it’s all about following through with your decision to budget.. you can get the best software, the best tools, the best methodology, the best intentions… but if you don’t follow through, it’s all for naught.

    • You’re dead right, budgeting is really easy, but its only 20% of it, 80% of financial difficulties stem from behaviours and they are a much harder thing to manage and change.

  • I don’t think any of this is particularly true at all… It seems to be what “SB” (good real name there), “reckons” we all do based on their own experience rather than actual facts. Also, the source link is one where no name is even attributed to the article.. Always a sure fire sign of a flawlessly factual article when nobody (I assume SB is the one who wrote it and is now here pimping their own site) will take credit for it eh? Heh..

    • agreed. just another blogger who either paid someone or without much effort put together an article to generate hits.

      Can i suggest

      I have been using for a couple of months, and it really comes down to developing good habits. Really good tutorials and live help sessions. Highly recommended. They dont charge a monthly fee, just a flat fee for the purchase of the software like the good old days! Plus a very generous trial period before handing over your money.

      i thought i could never use or stick to a budget, but surprisingly, its not all that bad! i have stopped looking at bank balance to determine my spending, and now focus on how much i have available to spend.

  • I agree with You Need A Budget.
    been using it for over 12 months (in that time I had a wedding/honeymoon to budget, and pay for), and its a great peice of software, and great to see where your money goes.. though like others say, its really a matter of personal commitment…

  • Here’s what I want: Budgeting software with projection abilities. I want to be able to set up my bills and my payday and I want AT ANY TIME my software to display “This is how much money you have left, and this is how many days are left until the next pay day….” and Ideally “So far this pay period, you have spent $X per day on food, your goal is $Y per day”. IE, I guess I want more “cash flow/forecast money management” than “envelope budget” software, which just doesn’t work for how I use my money — I put $X in a separate account every payday as savings, and then use what’s left. My problem is that I do too much spending in the first fortnight, and have to really scrimp on the second fortnight of a monthly pay cycle, and I want to STOP THAT! I’ve seen a few things that come close that only work for US banks (in terms of being able to auto import and auto categorize spending from eftpos/debit, or that are only offered on iOS. I would prefer a solution that works on PC’s first and foremost (this can be a web app, I don’t care), and if it works on Android as well, BONUS…. but I don’t really want something that will work ONLY on Android. Anyone know of something that’ll do this job? (Don’t say a spouse… I don’t have one of those. 🙁 )

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