10 Reasons why your Budget is not Working

Are you struggling with budgeting or your budget is not working as you expect? 

You find it difficult, stressful, uninteresting. You struggle to stick with the budget that you write. Every month you try to budget, but it’s not just working, and at the end of the month, you’re still confused about how you spend your money. You don’t like how budgeting makes you feel, so you don’t do it regularly anymore. The truth is, budgeting is not working for you.

But we are going to change that now. In this post, I will be sharing 10 reasons why budgeting is not working for you and what you should be doing differently to become better at budgeting.

So let’s get right into it.

Your expenses are more than your income

When you make a list of your expenses, you find out that they exceed your income. Perhaps when you write your expenses they come up to £3000 while your income stops at £2000. The question is: How are you going to cover the remaining £1000? 

If this has been happening to you, it’s time to scale back and review your expenses for what can be reduced or removed.

The second way to match your expenses to your income is to increase your income. If your expenses are more than your income, it doesn’t always mean that you are living beyond your means; it could mean that you are not earning enough. 

If your expenses are £3000 and you can’t seem to reduce them because everything seems essential, it’s time to increase your income. 

Dig your resume out of the archives and update it right away. Switch on that Linked in button that tells recruiters that you are available to talk, get into the market and look for a new job that will pay you more than what you are earning right now. 

If you’re happy with your current job or you don’t think you should be looking for a new job, then it’s time for you to find a side hustle to augment your current income. 

There are lots of side hustle options out there. I’ve made videos on my Youtube channel about side hustles you can do from the comfort of your home that won’t even cost you a penny to start up. Side hustles like YouTubing, blogging, affiliate marketing etc. 

Your budget is unrealistic

While writing your budget categories, you allocate money to each category based on your income and needs. One mistake you are making is assigning £50 to food per month, even though you know that £50 would not be enough.

You have done this because you want to allocate your money to other things like paying a loan, savings or buying something nice for yourself. 

What happens when you finish spending £50 on food is that you find yourself digging into your savings because you have to eat.

So writing an unrealistic budget would fail because it means writing a budget that doesn’t fit your current reality.

The next time you write a budget, ensure you write a realistic amount for each budget category. 

Writing an unrealistic budget as a way of reducing your spending is a wrong way to budget, especially for a category like food.

Budgeting a smaller amount in a category is not automatically going to help you reduce how much you spend on it. You have to make conscious efforts and take intentional steps to reduce your spending in that category. You can check my Youtube channel to reduce your grocery spending and maximize your grocery allocation.

Forgetting to include essential expenses

While doing a budget review for a client (yes, I can help you write a realistic budget), I realized that she had no allocation for toiletries.

So, I asked her how she pays for her toiletries, she shrugged and said she takes it from different categories.  There was no allocation for toiletries! I soon figures out that she was breaking her budget by using funds allocated to other categories in the budget! 

She was taking money from these other categories because she did not make allowances for essential expenses.

The consequence of this rogue budgeting was that she was constantly left confused and unhappy with her spending. She felt demotivated about saving and was convinced budgeting was not working for her.

If you want budgeting to work for you, you need to include all your expenses in your budget. Your budget needs to reflect your reality. 

Not budgeting for fun activities

Even though they plan to go to the cinema and eat brunch with the girls, many people don’t budget for these activities. 

So another reason why your budget is not working is that you are not budgeting for the fun stuff. 

You act as if you are not going to have fun, but you know deep down that you love enjoyment. 

So, since you know you will do these things, why are you not budgeting for them? Why are you not budgeting for the fun activities in your diary?  

Having fun is essential for everyone. If you work hard, you should play hard. I believe that you should always have something in your budget for fun. 

We are social beings who need to meet people, socialize and do fun things. If you have a party coming up next month; you will need to make your hair, fuel your car for the trip and perhaps buy new clothes; add it to your budget.

Else you will end up taking money from your grocery budget, utilities or even savings and then start feeling guilty for not saving as much as you wanted. 

Your budgeting tool is too complex

A lot of times, many of us are using budgeting tools that are too complex. Your budgeting tool is very cute and pretty with bells and whistles. You liked it at the beginning; when you carefully imputed all your numbers and it rolled out all these cute numbers for you. It gave you forecasts, past views, graphs etc; and you loved it, but the thing is that the tool is too complex for you to use regularly.

Now that you have realized how slightly intimidated you are by your budgeting tool, you have since abandoned it. The complexity of this tool made you stop updating, reviewing, or adjusting your budget.

That is why I have done a simple budget and saving book for you. 

I have designed this book to make budgeting and saving simple, straightforward and fun for you. 

It is something you can pick up on a Sunday evening and adjust with your pencil. You can write your thoughts, your budgeting goals and a lot more in this book and it is available for you on Amazon. 

However, if you’re the type who doesn’t want to use a book for your budget, you can draw up a simple excel spreadsheet and use that as your budgeting tool. 

Budgeting doesn’t have to be complex. If it is, it won’t serve you.

No Emergency Funds

Having no emergency fund is ruining budgeting for you. You have no allocated funds for unforeseen emergencies outside your savings and day to day spending.

If your boiler breaks down on a cold December day and you have no boiler insurance cover (you really should); you will be able to sort out your boiler problems quickly if you have money in your emergency fund.

However, if you don’t have an emergency fund, you might ruin your budget by using money already meant for other activities. Not having an emergency fund will make budgeting hard for you.

So as you budget for December, start putting aside an emergency fund for surprises like a boiler breakdown. 

You don’t make adjustments to your budget

One of the things I encourage people to do when they budget is to make regular adjustments to their budget as the month goes by. We know that life can be predictable if you live in places like the UK, USA, Canada and other western countries because of how the systems function. Still, sometimes, things happen that require you to review your budget. 

Also, sometimes you allocate things to a particular category, but you haven’t spent the full allocation (for instance, you have allocated £70 to your toiletries, but it has cost you a little bit less because you had a voucher, so you have saved £15) this leftover could go to your savings. But you won’t be aware of this leftover if you don’t review your budget regularly.

That is why you need to review your budget halfway through the month. I always try to review my budget on Sunday evenings. I mentioned this in a recent blog post where I talked about five things you should do on a Sunday evening for a more productive week. Not making adjustments will keep ruining your budget. Stop putting your budget in a drawer somewhere and completely forgetting about it. If you can’t review it every Sunday, pick the middle of the month and check how far you have come and how well you are sticking to the debit. 

You don’t budget for annual expenses

Some expenses can only be made annually. Others are made annually because they are cheaper when made annually such as home insurance, car insurance and road tax. But for you to make them annually, you need to budget for them. So if your road tax, home insurance, or car insurance is due, you need to include that annual expense in your budget. 

If you can’t include the expense in the budget for one month, you can spread it over the three-month duration beforehand by allocating something for it monthly, so that in the actual month that it is due, you can pay easily. 

However, if you are not budgeting for the annual expense at all, you are letting the annual expense surprise you the same way emergencies are surprising you, and that shouldn’t be the case. 

Take a note of all the expenses that you have to pay annually (and this may include rent if you are in Nigeria). Start budgeting for annual expenses at least three months before they are due. 

Don’t wait for that December 13th month payment alone for your January rent payment; instead, start putting money away for it every month so that when it comes in January, it’ doesn’t wipe you out and ruin your budget. 

No self-discipline

This may trigger you a bit and I’m sorry in advance but another thing that is ruining your budget is that you have no self-discipline at all. 

Even though I love you and applaud you for wanting to improve your finances and do better with your money going forward, I must tell you the bitter truth and that is you need to have self-discipline. 

If something is not in your budget, don’t do it. 

If it’s not an emergency or a life-impacting expense, please don’t do it. Someone comes along halfway into the month to invite you to a party that’s going to be fun, but you will need a new dress, a new pair of shoes, a new wig, or new makeup and instead of saying no, you start ordering new dresses, shoes and hair to attend a party you didn’t plan for in your budget. It’s time for you to be more disciplined. 

NO is a complete sentence that applies to this kind of situation. When they come to you with that last-minute Aso Ebi that is not in your budget, simply say NO and walk away. 

You don’t need a vacation every other month. Yes, I understand that you are tired and you came back from your last vacation feeling like you need another one already (that’s you and me) but it’s time for you to be self-disciplined and say no to that expense that is going to break your budget. 

You are doing great so far, but you can do even better by being more disciplined. 

If you are the kind of person who suffers from FOMO (fear of missing out) – you don’t want to miss out and so you’re trying to attend every event; I would like you to know that your FOMO is breaking your budget.

Kill that feeling of FOMO because you simply can’t be everywhere and everything to everyone. When you exercise a little more self-discipline, your budget will thank you for it.

You don’t like the word budgeting

Another reason why budgeting is not working for you is that you hate the whole idea of budgeting and it doesn’t just sit well with you. You have that mindset that budgeting makes you feel poor and that it is for poor people. You need to have a paradigm shift, a shift in your mind that budgeting is not a thing that poor people do but instead it is a thing that people who want to build wealth do. 

It means that you know where your money is, how much is coming in and going out. It means you’re in the driver seat of your money, future and destiny. Budgeting means you’re a boss that understands money and respects it. You need to change your mind about the word budgeting. 

However, you can avoid the word budgeting and use the word ‘money planning’ until you get used to a good idea. If you’re someone who hates the idea of budgeting, I’ll like to remind you that budgeting is your winning secret, to help you save, invest, build wealth and develop a bulletproof life.

You can also learn more about budgeting on my channel here, to help you develop a more positive attitude to budgeting.

I hope these ten reasons are useful enough to help you budget better, stay on top of your money a little bit more and put you in the driver seat of becoming the millionaire next door. 

Till my next post,

Ronke O.

Published by ronkeodewumi

I am a Chartered Accountant (ACMA, CGMA) and seasoned Management Consultant with about 16 years of experience driving the delivery of strategic solutions to complex problems of global firms. Through my blog, youtube channel, social media, tailored courses and downloadable material, I share information, resources and tips to help you manage your money better, grow your business, progress in your career, thrive in difficult times and create a life that is safe from failure, while being the best version of yourself. You will also find here links to my youtube videos where I share more nuggets to help you achieve and live your dream life. I am based in London, United Kingdom and always happy to connect with you via email (ronkeodewumi@gmail.com), social media or my contact page here.

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