On paper, it can be easy to create a budget: allocate funds for necessary expenses, set aside savings, and voila, you’re on your way to financial freedom!
But often, creating a budget you can realistically stick to takes more work. Striking the delicate balance between your income, expenses, savings and desires can be quite the juggling act.
If you’ve found yourself asking “how to stick with a personal budget,” then you’re not alone. According to a National Australia Bank (NAB) Australian Wellbeing Survey, “Three quarters of Aussies keen to save but challenged with everyday expenses and activities.”
Why can’t I stick to my budget?
It’s a question we’ve all asked ourselves at some point: “Why can’t I stick to my budget?” The truth is, sticking to a budget can be challenging for everyone. While lack of self-control is often blamed, the truth is usually much more complicated. Here are some reasons why:
You’re still looking for your (real) motivation to budget.
Perhaps the most subtle yet significant reason sticking to a budget can be challenging is the lack of deep, personal motivation. Why are you budgeting in the first place? Is it to pay off debt, save for a vacation, build an emergency fund, or secure a comfortable retirement?
If you haven’t clearly defined your “why,” you might find it difficult to maintain your budgeting discipline. This “why” serves as your anchor, giving you a reason to resist unnecessary spending and keep your financial goals in sight. Without compelling motivation, even the best-planned budget can seem like just a bunch of numbers on a page.
You need to (re)define your limits.
Sometimes, the inability to stick to a budget stems from having limits that are either too rigid or not well-defined. If your budget feels like a straightjacket, something’s not right.
Ask yourself, “What are the things I enjoy that are worth allocating funds for?” and “What are the areas where I could cut back without feeling deprived?”
You haven’t found a budgeting system that works for you (yet).
Finding the right budgeting method can sometimes feel like finding the proverbial needle in the haystack. You might feel overwhelmed with so many different budgeting systems available, each with its own complexities and nuances. Some budgeting methods might seem too stringent, some too lax, and others overly complicated.
The problem might not be with your commitment or discipline but simply that the budgeting system you’ve tried isn’t the right fit for you. Budgeting isn’t a one-size-fits-all process–what works for one person may not necessarily work for you.
You’re aiming for perfection.
Budgeting, like any other skill, requires practice and patience. A common pitfall is aiming for perfection right from the get-go. The reality is budgeting is a process, and mistakes are a part of that process. Even the most disciplined among us can have moments of weakness or unexpected expenses that momentarily derail our budgeting plans. If you’re too hard on yourself for these minor deviations, it can discourage you from sticking to your budget in the long run.
How to Create a Personal Budget You Can Stick To
1. Define your motivation.
Before you even start crunching numbers, take a step back and think about your motivation for budgeting.
What are your financial goals? Be as specific as possible.
Instead of saying, “I want to save more,” say, “I want to have $1,000 in my savings account by the end of the year.” By setting a specific, measurable goal, you’re giving your budget a purpose and setting a clear target to aim for.
2. Choose realistic spending limits.
Your budget should reflect your reality, not an idealised version of it. Start by analysing your past spending to understand where your money is going. Then, set spending limits for different categories like rent/mortgage, groceries, entertainment, and so on.
Be realistic and honest with yourself during this process. If your budget is too restrictive, it can create feelings of deprivation and may lead to overspending. Conversely, if it’s too lax, it won’t help you achieve your financial goals.
It’s okay to allocate funds for fun and leisure activities. The goal is not to cut out all discretionary spending but to ensure it’s within a limit that supports your overall financial health and goals.
Also, your budget needs to be dynamic. Current events, such as a recession threat, may require adjustments to your spending limits. Perhaps your income has decreased, or your job security is uncertain. In such cases, you must revisit your budget, reassess your limits and make the needed adjustments.
3. Experiment with budgeting systems.
As we’ve mentioned earlier, budgeting isn’t a one-size-fits-all process. There are numerous budgeting systems out there, each with its own set of advantages and drawbacks. Some people thrive on a detailed budget that tracks every penny, while others prefer a more high-level approach.
So feel free to experiment with different budgeting methods. Try the 50/30/20 rule, zero-based budgeting or an app that tracks your spending. Whatever you choose, remember the best budgeting system is the one you can stick to.
4. Forgive yourself if you overspend once in a while.
Slip-ups from time to time are normal as you adjust to your new budget. When this happens, the most important thing is not to beat yourself up over it. Instead, acknowledge what happened, understand what led to it and use it as a learning experience to avoid repeating it. Remember, budgeting is a marathon, not a sprint. It’s about long-term financial health, not short-term perfection.
5. Considering a big purchase? Sleep on it first.
Impulse buying, especially on high-ticket items, can quickly derail your budget. One of the best strategies to avoid this is to implement a “sleep on it” rule for big purchases. Instead of buying something expensive on a whim, give yourself a day or two to think it over. This cooling-off period can help you assess whether the purchase is truly necessary and worth the cost, or if it’s just an impulse driven by emotion or momentary desire. And even if you still want the item, you’ll have had the time to consider how it fits into your budget and make a more informed decision.
6. Check your social calendar.
Social events, such as friends’ birthdays, weddings, and other gatherings, can easily lead to unexpected expenses. One way to prevent these from derailing your budget is to incorporate them into your planning process.
So regularly review your social calendar and note any upcoming events requiring additional spending. This could include gifts, travel expenses, special attire or dining out.
7. Identify your spending trigger.
If you consistently overspend despite your best efforts, it may be time to delve a little deeper. You might be dealing with emotional or psychological spending triggers that prompt you to spend money, often impulsively. One interesting explanation is the concept of the Outer Child, which says a part of ourselves is inclined to spend money impulsively.
Once you identify your triggers, start developing strategies to manage them. This might involve finding healthier ways to cope with negative emotions, setting boundaries for social spending or avoiding situations where you’re likely to be tempted to overspend.
Call for a Free Financial Assessment
Sometimes, the first step is the hardest one to take. That’s why we’re offering a free financial assessment to help you get started. We also provide information on debt solutions that could be available to you, depending on your situation. Don’t let financial stress hold you back from the life you deserve. Contact us today.