Money focus: How often do you stick to your budget?

Each week we ask a question to help you focus on an area of your finances that might need a closer look. This week: How often do you stick to your budget?

It’s one thing to create a budget, quite another to actually stick to your budget. For many of us, budgeting tends to fall over in the doing.

If you have a budget at all, of course. If you’re one of the 35 per cent of Aussies who don’t have a budget, it’s definitely time you joined the party. Keeping a budget helps you:

Know where you stand financially
Take control of your money
Direct money to what’s most important to you
Find a balance between spending now and saving for the future

While creating a budget is a good exercise in itself to know where you stand, it’s just the beginning. If you don’t stick to your budget, you won’t be taking the necessary steps to improve your financial position.

So, what’s holding you back?

Some common reasons why you might not be following your budget are:

Your budget is too tight

Before you set your budget, have a sound knowledge of your actual expenses and how much you earn. For instance, don’t rein in your grocery bill on paper, but need to spend more to actually feed yourself each month. Be generous with your ‘needs’ and only cut corners on things that are true ‘wants’.

Your savings goals are unrealistic

Saving for the future is super-important, but so is living in the now. If you’re allocating such a big portion of your income towards savings that you’re miserable all month, chances are you’re going to think budgeting is stupid. Before you chuck the budget in the bin, have a look at what your expectations are. You might want to be a FIRE star and retire at 32, but your income and basic expenditure may want differently. Be realistic about your financial goals – both achieving them and living with them.

Your budget isn’t any fun

Just remember, it’s not a stingy bank manager setting your budget – it’s you! And you should be very kind to yourself. It’s a bit too easy to be a no-fun nigel when it’s just numbers in a spreadsheet. But your budget isn’t a spreadsheet, it’s a life. Your money is there to support a good life, not a boring one, so make sure you set some cash aside to blow each month on whatever makes you happy. No guilt attached.

Your budget is too much work

A budget that’s easy to stick to is one you can basically ‘set and forget’. Automate as many ongoing expenses as possible, tuck your savings away at the beginning of each month, allocate your spending money and then go out and live your life. Check in at the end of each month to run through your actual expenses and tweak your budget for next month where needed. A once a month commitment should be all you need to stick to your budget.

Your budget has gaping holes

‘Big expenses’ that you haven’t planned for can wipe out even the tidiest budget. It’s best to create an ‘unexpected’ or ‘other’ fund to accommodate the unexpected. An offer of a weekend away or having the hat get passed around after a friend’s loss aren’t things most of us can say no to. So plan for the unplannable by adding a generous ‘other’ category to your budget.

Your budget is only loved by one of you

If you’re in a couple, it will take both of you to stick to your budget. Having the partner who is ‘good with money‘ set the budget might seem like the obvious choice, but it’s actually unfair on the ‘live a little’ partner. You both need to decide the budget together. Good-with-money needs to make room for Live-a-little’s ‘mad money’, and Live-a-little needs to learn to spend more carefully to accommodate Good-with-money. Relationships are all about compromise, people.

Your budget failed to get your buy-in

If you’re only budgeting because you ‘should’ tick that box off your to-do list, then stop. Take some time to figure out exactly why you want a budget. What are your financial goals? How do you want to live your life now and in the future? How financially secure do you need life to be? What sacrifices are you prepared to make now in order to set yourself up for later?

The answers to all of these questions will help you understand why budgeting is so important. Your answers will also help you figure out what a budget you can actually stick to looks like. Not because you should, but because you want to.