Dividing up your money into little piles for the various things you need (and want) doesn't seem like a difficult process, so why is a budget so hard to put into practice?
You didn’t start with the right number. Your take home pay (after all deductions) is the starting point.
You used the wrong time frame. Some bills are monthly, but most of us get paid every two weeks and find a two-week spending plan easier to follow.
You had no idea how much you were spending before. Track your expenses for at least two pay periods and create your budget based on actual data, not your best guess. You can always tweak your budget if it proves to be unrealistic.
You forgot to record all your expenses. Whether you use the latest app or a collection of post-it notes to track expenses, it needs to be quick and easy, and you need to make it a habit. Try using a credit or debit card for everything so you can always see exactly where your money went.
You spend too much. Just because you were spending $400/month on dinners and drinks doesn’t make it reasonable or sustainable. List up your needs, analyze your wants, and set priorities... force yourself to make choices!
You didn't contribute to a reserve fund. Unexpected expenses like birthday presents, car repairs, or a trip to the dentist can all derail your budget if you don't have an emergency fund to dip into.
You didn’t ensure your spouse/partner/kids were on board. It's a household commitment with all hands on deck, and don’t be shy about telling your friends either– declining invites you can’t afford is not a crime!
You had no goal and lost your mojo. Pick a realistic goal your new budget will help you achieve… Paying off a credit card? Topping up your RESP/TFSA/RRSP contributions?
Alanna Abramsky is a financial coach at Enriched Academy and once managed to save 40% of her annual salary, so she knows a thing or two about creating a budget and sticking to it. If it's time to get your household expenses under control, make sure to join Alanna next week for a free free webinar on how to get your budget set up and some great tips for managing expenses.