Having a tough time sticking to your new budget? Here’s how to fix your financial plan
By Krystal Yee , Toronto Star
I started budgeting when I was 22 and halfway through college. Until then, I wasn’t sure how to do it and while I knew I was constantly spending more than I had, I didn’t have the discipline to stop.
I tried to create what I thought was a realistic budget, but it failed and after a few months, I gave up. I didn’t get serious again until after I graduated with over $20,000 in debt.
When I look back, I realize it didn’t work for four reasons:
1) No knowledge of past spending habits
It’s hard to create a realistic budget if you don’t have anything to measure it against. How will you be able to spend less this month, if you don’t know how much you spent last month?
The basics of budgeting begin with figuring out how much money you will have for the month, dividing it up based on what you want to do with it and then tracking where your money actually goes.
A budget provides guidelines and when you are accurately recording your spending habits – whether it’s in a simple spreadsheet, or with a budgeting tool like Mint or Quicken – the numbers show the way.
I had never saved receipts, so when I went to build my budget, I started plugging numbers into the spreadsheet that sounded reasonable – not realizing that the $100 I thought I spent on groceries each month was actually closer to $250.
2) No defined goals
Most people budget because they want to achieve a financial milestone – pay down debt faster, save for a down payment, or start a family. These are great goals, but not specific enough to be truly motivating.
I just knew I wanted to stop going further into debt, and didn’t take it any deeper than that.
What I needed instead was a specific goal such as, “I need to spend less than $50 a month in restaurants, ” or “I need to find an additional $50 in my budget each month to pay for my utilities.”
3) Quitting too soon
The first time I went through the process, I stopped using my budget midway through my third month because it was frustrating not being able to see results.
But budgeting – much like exercising – takes time. I was too impatient. I wanted immediate results, and didn’t realize that I needed to work smarter – not harder.
I hadn’t taken the time to identify where I was constantly overspending and trying to figure out a way to cut back in those categories.
I also overlooked simple things – like getting rid of my cable bill, batch cooking, or trying to find a better cellphone plan.
4) Not realizing what a budget is meant to do
I looked at a budget as a way to stop me from having fun and didn’t understand that its purpose was to help me manage my money so that I could live a debt-free life.
Once I realized that my unsustainable lifestyle was holding me back from achieving goals like homeownership, travel, and starting a family, I started to realize that a budget wasn’t about deprivation – it was about empowerment. I was creating a better future for myself.