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We’ve all been there. You create your budget, think you’ve done an amazing job, and then just a couple of weeks later something happens and you give up on the whole thing. Budgeting is challenging. It takes time to get it right.
I’ve been budgeting for years now and as my life has changed I have had to learn new techniques to over the new challenges that these changes bring. Therefore, I’ve come across all manner of issues. But luckily, I’ve written them all down for you in this post.
Challenges of budgeting #1: Overspending
This is a big one and likely one of the reasons that you started a budget in the first place. Unfortunately, just creating the budget doesn’t immediately change your underlying behaviours. It is not a quick fix. However, there is a way to to tackle this.
Get a clear goal. When you set yourself motivating financial goal it becomes much easier to control your spending. But the goal has to be really good and really personal to you.
For example, you may decide that you want a family holiday, so you need to stop overspending for that reason. However, a generic family holiday is probably not going to get you ditching your favourite shops. You need to pick out your dream destination, find out how much it is, and then reflect the savings you need to make into your budget.
When you can see yourself sunning it up on a very specific beach, then when it comes to making that one off purchase or moving the money to your savings account, the choice is much clearer. The goal will hold you to account.
Challenges of budgeting #2: Getting everyone on board
You might have been reading a few articles online and watching all the YouTube videos, but the rest of your family might not. Getting everyone on board with your vision of shaking up your finances is on of the biggest challenges of budgeting, but it is not impossible.
It starts with having regular conversation with all those involved. You might want to start small with a few money saving strategies that have little impact. As people start seeing the benefits of this you can scale up.
The trick here is to demonstrate the positive impacts on the individuals involved. You might be motivated in a very different way than your partner, so you need to make sure that their goals are reflected in your budget too. What is in it for them?
By having these conversations, you can start to build a financial plan for your whole family. Then, with everyone invested in the journey, you’ll start to see the effects compound in ways that you didn’t anticipate.
Challenges of budgeting #3: Over restrictive
This is normally one of people’s biggest fears when creating a budget: that they’ll have to give up everything they love. Sometimes people do this and find that they can’t stick to it, because the level of deprivation is too high. Fortunately, that is not the point of budgets. Budgets are about allowing, rather than restricting.
Let yourself have some freedom. When you first start budgeting you will probably find that your finances are out of control in more than one area. Some of these areas you will feel more attached to than others.
For example, you will likely feel more upset about cutting down your days out spending, than you would be about spending less on electricity and gas. Therefore, you focus on the electricity and gas first. Make sure that is as low as possible and put any savings that you make towards your goal.
Another great idea is to give yourself a pot of fun money. You can do this for each person in your household too. It will be yours to spend on what you want and no one is allowed to ask questions. As everyone else in your household is doing the same, you shouldn’t get too much backlash.
Challenges of budgeting #4: FOMO
We’ve all experienced FOMO. We see someone else doing something and we want to get involved even if it is not necessarily something that we would be interested. How do we factor this into our budgets to avoid missing out?
Firstly, reflect on your goals. What is more important to you? Achieving that goal or jumping on this idea? If you are strongly committed to your goals, then it will make the choice a lot easier for you.
It can be harder when children or other family members are involved. There might be an event happening that you don’t want them to miss out on. Planning and your fun money are the key here.
If possible, anticipate these events and plan them into your monthly budget. The summer holidays are a big one, so try to create a sinking fund for this that means that you have more money to spend during that time.
For smaller things, encourage people to use their own fun money. Ice creams at the beach and trips to the cinema can all be paid for out of individual pots. It encourages good money habits for the future too.
Challenges of budgeting #5: Staying focused
When you first create a budget you expect to see huge changes in your financial situation overnight. In reality that is rarely the case. Instead, you are likely to see gradual progress over time and staying focused on process is a real challenge.
Build new a habit around budgeting. This includes daily check-ins with your bank accounts, weekly updates with the budget and a monthly date to create a new one. It can sound like budgeting is going to take over your life, but in reality these things just take a few minutes, but their impact is huge.
You want budgeting to become an important and necessary part of your life, so attach these habits to other events in your life that you already do regularly. For example, you could check your bank accounts whilst making your morning cuppa, or complete a quick budget update over breakfast on a Saturday morning.
Another powerful tool is to remind yourself of your goal whenever you feel your focus waning. If you need to, call a family meeting and plan out your goals in a bit more detail. Get extra clear on what you are trying to achieve and why.
Challenges of budgeting #6: Dealing with your emotions
If money was purely about the exchange of pieces of plastic and metal, then there wouldn’t be a world of bloggers out there trying to help people manage their money. The reality is that our financial habits are very much tied to our emotions.
You need to build a picture of the impact of your emotions, thoughts, and feelings around money. It is impossible to know what you need to change if you have no idea what the issues are in the first place.
One of my favourite ways to do this is to journal. Now this doesn’t have to mean that you start pouring your heart out into a diary, instead just a simple mood tracker could help you out. If you feel stressed or tired and this cause you to fall off the meal plan and order a takeaway, then make a note of this. The more frequently you are able to track your moods and emotions, the more likely you are to find patterns.
Once you know your emotional spending triggers, you can plan them into your budget. You can also take steps to provide alternatives. If on that stressful day, you had a few frozen pizzas in the freezer, you could cook those and save the money instead.
Challenges of Budgeting #7: Little to no progress
Like I said, a budget isn’t going to achieve massive instant change in your life. It is more like a map that guides you to your destination. But it can be difficult to see any of the good work you are doing materialising in real life. That is why you might need a few tools to help track your progress.
Creating visual tools can really keep you motivated and show you the impact your budget is having. You might be trying to pay off debt, or over pay on your mortgage and it feel like you are have been working hard for months and seeing none of the rewards.
Therefore, you might want to use a spreadsheet to keep a record of the amounts that you have been working on. If it is debt, then make sure that you record the amount of debt you had at the start, how much you have paid off, and how much you have left go. If you are saving for a holiday, set a specific goal and work out what percentage you are toward achieving that.
If you like physical trackers, then print out a picture and divide it into 100 squares. Whenever you pay off or save another 1% of the total, then colour in another square. You’ll soon see the picture start to fill up.
Challenges of budgeting #8: Forgetting important events
Some events only occur once a year, such MOTs and birthdays. It is easy to miss these and have them throw your budget off in the middle of a month. Depending on the scale of the missed event, it could throw your budget off for months.
Get a planner or an online calendar and take an hour to go through everything that you can think of that could come up in the year. Go through birthdays, anniversaries, car maintenances, household services, annual bills and make sure that you have them all written down. When they show up in the month, make sure that you allocated extra money for them.
Alternatively, you could take this yearly plan and start creating sinking funds to pay for them. Sinking funds are pots of money that you pay into regularly to cover irregular events. This way you spread the cost and are ready to deal with them when they show up.
The next layer to that is having an emergency fund. This is truly designed to deal with those events that you cannot predict. Ideally you want a minimum of around £1,000 in there, but would look to build this up to 3-6 months worth of expenses to cover situations such as job loss.
What are your biggest challenges when budgeting?
We all have our own unique challenges, so use the comment section below to share what you struggle with. It might help someone else to know that they are not alone in their struggles.
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