As a little kid my sisters and I would come home from church and raid the “junk” drawer, eating all the chips. Mom would often get frustrated explaining that she was hoping to save some of those for our school lunches.
A budget is just like this. The money in your checking account has nothing to do with whether or not you can afford something. You may have $4,000 in your account but if all of it has already been allocated to pay other expenses you don’t really have it.
That’s why I like budgets. It allows me to reserve money for the things I want/need.
There are three common obstacles to creating a budget and three common obstacles to using a budget. Each, and potential solutions, are discussed below.
Obstacles to Creating a Budget
1) “Logistics” – People often lament they don’t know how to create one, don’t understand money, aren’t good with spreadsheets. Don’t worry, you can download my budget template. It’s free, easy to use, 100% automated, and looks great 😉
2) Control – Often times people incorrecty perceive that a budget will tell them what they can and can’t buy. They feel as if they lose control of an important aspect of their life, money. In reality we can budget any amount we want. If we don’t have enough for spending we reduce other expenses or increase income to pay for this.
3) Fear – They are scared what a budget will tell them about their current financial situation. All fear stems from the thought that we won’t be able to handle a certain situation. In reality we can handle it, it’s just money. If you’d like more help with this sign up for a one on one free 30-minute coaching session with me.
Here’s a link to download my free budget template and a few reasons why I use it with all my clients:
- Automated – Creates your budget in three easy steps.
- Personalized – No predetermined expense categories. You set them based on your individual needs.
- Simple – The contemporary and simple design doesn’t overwhelm with a bunch of numbers, formulas, charts etc.
- Effective – It helps you stay on budget by making small corrections daily rather than trying to save $500 the last week of the month.
- Free – What more can I say!
Obstacles to Using a Budget
1) Habit – Updating a budget on a daily basis will be a new habit. Pick a time of day and update it at the same time each day. – OR – Update it on your phone as you make purchases and pay bills throughout the day. Manage all your income and expenses from one single account. That way you don’t have to check multiple account .
2) Failure – Often when people start tracking their spending they go WAY over on a few line items. They stop tracking thinking there is no way to make it work. Keep tracking your expenses even if you go over, keep tracking until the last day of the month. Then next month make adjustments to how much you are budgeting for each line item. It takes most people about 3 months to get to an accurate working budget.
3) Frustration – People will give up if they don’t feel like they are making progress fast enough. Initially it can be slow. But with time the rate increases.