I'm a financial planner, and I see people's budgets fail over and over for 4 reasons (2024)

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• If you've ever tried to set up a budget only to overspend every category, there's a good reason.
• In my experience, budgeting without goals and forgetting non-monthly expenses are major issues.
• Failing to budget money for fun, and not being on the same page as a partner, are also obstacles.
• Check out Vanguard Personal Advisor Services® to get the investment advice you need to help build the life you want »

Have you ever set up a budget but had trouble sticking with it over time? Have you and your partner ever argued about spending? Have you ever felt like random bills and expenses throw off your budget despite your best efforts? If so, you're not alone.

Here are the most common reasons I've seen budgets fail, and what I suggest instead.

1. You're budgeting without clear goals

A budget is meant to help you spend less than you earn, and find dollars you can use to make progress on your goals. Whether you're working on paying off debt, building an emergency fund, investing for retirement, or saving for a home, having clarity on your goals enables you to connect everyday budgeting to what you'll be able to accomplish longer term.

For example, budgeting because you feel like you should spend less is very different from budgeting because you want to buy a home in two years and you know that sticking to your budget is what will get you there.

2. You forget to budget for non-monthly expenses

Non-monthly expenses are things that you don't pay for monthly, including auto insurance premiums, real estate taxes, vacations, and holiday spending. Since most of us think about budgeting on a monthly basis, it's easy to forget about expenses that don't occur monthly. But in order for your budget to work over time, it's critical to plan for both monthly and non-monthly expenses. In fact, it's so critical that companies like Monarch Moneyand YNAB Appare working on ways to help users incorporate non-monthly expenses into their monthly budgets.

In order to plan for your non-monthly expenses, spend a few minutes adding up all the non-monthly expenses you anticipate over the next year. Next, divide that total by 12 and transfer that amount into a separate, non-monthly savings account. When a non-monthly expense comes up, use cash from your non-monthly savings account to cover the cost.

3. You're not budgeting for fun

Although most of my role as a financial planner is to help clients achieve their goals, I also strongly encourage clients to create a budget that enables them to enjoy life along the way. I find that clients are most successful, and most content, when they strike the right balance between the two. Balancing spending and saving is the key to sustainable progress over time.

For some clients, adding "fun" as a line item in their monthly budget gives them the freedom to spend a little extra on whatever brings them joy each month. For others, setting aside a portion of their bonuses and equity compensation payouts for "fun" helps them to enjoy life and celebrate their windfalls. And some clients just like having a little extra wiggle room in their entertainment or dining budget to give some flexibility to have fun. Different approaches work for different clients, but it's important to find the approach that works for you and have a little fun!

4. You're on a different page than your partner

One of the most common areas where client couples disagree is on spending. When clients aren't on the same page as their partners, it often results in being critical of one another's spending habits. One of the most important things I do with clients is help them align on their financial goals so that they feel like they're on the same team working on shared goals. We also establish how much they need to dedicate to their goals on a monthly basis to make progress. Once they are aligned on their goals and the amount of money needed from their budget to make progress, it's much easier to resolve spending disagreements.

From there, we work through what budget adjustments need to happen to find the dollars for their shared goals, and decide on the best account structure to support their spending. For example, some couples do best with joint checking accounts, while others do better with separate checking accounts, and still others prefer a combination of both. Lastly, we agree on a budgeting system, whether it's an app, a spreadsheet, or even envelopes of cash, that works for both partners.

Above all, know that budgeting takes practice and experimentation — if your budget isn't working, explore ways to approach it differently to find a system that works for you.