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Budgeting can seem overwhelming and managing your finances can seem like a major task that seems impossible to figure out. There are SO many different ways to budget and SO many different people pushing different ways to budget.
What’s the right way to budget? Should I try cash envelopes to budget? Should I use an app? What about using a spreadsheet? Ugh. There’s too much out there to figure it out. And then you’re back to square one and definitely not budgeting and definitely not knowing where your money is going every month.
I’m fairly certain that most people that have never budgeted before have similar questions go through their head. If you’re anything like me, you definitely did.
I remember absolutely panicking about my post grad student loan bill every month of $2,000 and thinking, “How the hell am I going to make this work on a teacher’s salary?!” I was 23 and absolutely freaking out about how I was going to afford my life in a few short months.
This is the moment that determines if you’re going to be successful with budgeting. There isn’t any crazy math knowledge required, no special courses, no specific way, really it’s very simply why people succeed at budgeting and others don’t.
People don’t succeed at budgeting because they don’t want to do the work.
Budgeting is simple, but it’s in those moments where it’s make or break. People simply don’t want to do the work that is required to budget.
They want the freedom that a budget would bring, but they don’t want to do the work. Budgeting is easy, but it does take some time and desire to have the freedom to spend money.
I do get it, there are SO many different ways to budget out there. The reality is that you need to just commit to something that tracks your money and start. What works for me, might not work for you. That’s why you need to do some trial and error and find out what works for you.
It’s going to take time and some work, but the results you will see are so worth it. I have a template for Google sheets available, if that’s something you think would work for you.
People don’t succeed at budgeting because they don’t want to face their reality.
I remember when I hit my reality moment before I graduated from my masters program and realized how tight my budget was going to be with my minimum monthly payment. All the blogs out there said a budget would be freeing, WTF did I just sign up for?!
The reality is that in the beginning, your budget is going to feel restricting because it’s a new way you are managing your finances. But, something that helped me a lot was really focusing in on my why.
I want to live a life that wasn’t governed by bills, wasn’t dictated by when I was being paid next or how much I was getting paid. I want to live a life that doesn’t require me to stay at a terrible job just because I need the money. I want to do work that I absolutely love, regardless of my paycheck.
None of that was my reality then and it still isn’t my reality today, but I’m getting closer to living that life. All it took was my one decision to change my future and create a budget that helps me to get there. I’ve now created a budget that allows me to spend my money on things that I value and I do whatever I can to save money on things I need to spend on.
As a twenty something that’s quickly moving towards my upper twenties, people think I’m absolutely insane to still be living with my parents. But, I don’t mind living at home for now and it allows me to reach my long term goals so much faster. My parents live in NJ, cost of living is ridiculous, which also means my salary as a teacher is basically the highest it would be in most other parts of the country. This means $0 towards rent while getting a higher salary.
This was planned and a major change I made in my post grad plans once I made a fake budget for post grad. You need to face your realities, so that you can make changes for your future to get you to your goals.
Budgeting is not going to be easy, especially at first, but I promise you it will definitely be worth it. I can’t even imagine where my life would be now if I didn’t start budgeting back in 2015. I know for sure I wouldn’t have paid off 6 figures of debt so far and I definitely wouldn’t be in a place to start thinking about moving out. So, what’s stopping you from being successful at budgeting? I’d love to help, check out my email coaching, if you’re struggling with starting. Comment below what’s challenging you!
FAQs
4 important reasons why your budget isn't as successful as you thought it'd be
- Your budget feels too restrictive. ...
- Your income varies month to month. ...
- You're creating a budget based on an "ideal" spending plan instead of what's actually realistic. ...
- You're using a budgeting method that doesn't work for you.
What is a good way to make sure you're creating a budget that's realistic? The primary reason people don't budget is because they lack the behavior to stick to a budget.
What is the 70/20/10 rule money? ›
The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.
What is the 50 30 20 rule of money? ›
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
Why is budgeting so hard for me? ›
Budgeting is difficult when your income or spending is inconsistent. Like many people, my spending and income may vary month to month. Sometimes I'll have greater expenses due to doctor's appointments or weekend trips I'm taking.
What percentage of Americans live paycheck to paycheck? ›
A majority, 65%, say they live paycheck to paycheck, according to CNBC and SurveyMonkey's recent Your Money International Financial Security Survey, which polled 498 U.S. adults. That's a slight increase from last year's results, which found that 58% of Americans considered themselves to be living paycheck to paycheck.
What percent of Americans don't budget? ›
27% of Americans Don't Think They Need a Budget
Almost 30% of Americans don't budget because they simply don't think they need this tool. Men are slightly more likely than women to say they don't need a budget, but women are almost 4% more likely than men to say they won't stick to a budget.
What percent of people actually use a budget? ›
While close to a third of Americans (32%) say they review their budget and spending on a regular basis, 16% say they often spend more than they budget for each month. And when the money isn't in the budget, it still has to come from somewhere.
Why can't I get my finances in order? ›
"Denial and procrastination" are often the main factors that keep people from getting their finances in order, said Bobbi Rebell, CFP, personal finance expert at Tally. "So many people just avoid dealing with their finances," she said.
Can I live on $4,000 a month? ›
Bottom Line. With $800,000 in savings, you can probably cover $4,000 in monthly living costs. However, retirement accounts alone cannot safely sustain that spending for a 25- or 30-year retirement.
The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.
What is the best savings breakdown? ›
We recommend the popular 50/30/20 budget to maximize your money. In it, you spend roughly 50% of your after-tax dollars on necessities, including debt minimum payments. No more than 30% goes to wants, and at least 20% goes to savings and additional debt payments beyond minimums. We like the simplicity of this plan.
How much savings should I have at 50? ›
By age 50, you'll want to have around six times your salary saved. If you're behind on saving in your 40s and 50s, aim to pay down your debt to free up funds each month. Also, be sure to take advantage of retirement plans and high-interest savings accounts.
How much should a 30 year old have saved? ›
Fidelity suggests 1x your income
So the average 30-year-old should have $50,000 to $60,000 saved by Fidelity's standards. Assuming that your income stays at $50,000 over time, here are financial milestones by decade. These goals aren't set in stone. Other financial planners suggest slightly different targets.
What are the four walls? ›
Personal finance expert Dave Ramsey says if you're going through a tough financial period, you should budget for the “Four Walls” first above anything else. In a series of tweets, Ramsey suggested budgeting for food, utilities, shelter and transportation — in that specific order.
What 3 factors affect a budget? ›
Factors that can affect a budget include setting planning, leadership styles, government policies, systems, and resources. These factors have a positive influence on the decision to make budget changes and affect the implementation of budgeting .
What are the three 3 common budgeting mistakes to avoid? ›
4 Common Budgeting Mistakes & How to Avoid Them
- Budgeting Mistake #1: Not Saving for Emergencies. ...
- Budgeting Mistake #2: Overestimating How Much You Have Left to Spend. ...
- Budgeting Mistake #3: Leaving Out Money for Fun. ...
- Budgeting Mistake #4: Forgetting to Adjust Your Budget Over Time.
When you analyze it, there are really three reasons why people are unsuccessful in budgeting. The most common causes of failure are unrealistic goals, quitting too soon and misunderstanding what a budget really is.
What are the three most common budget mistakes? ›
The biggest budgeting mistakes to avoid are estimating costs, forgetting to account for all your expenses, being overly restrictive and leaving savings out of your budget. Fortunately, they're all avoidable.
