If you can change these five mistakes, budgeting won’t be dreadful, and maybe even fun.
I get some version of this question every week as a money coach.
“I hate budgeting. I don’t know what I’m doing, and I just dread it. But I know that if I put a budget together, my finances will be better, and I can do more of the things that I want to do. So do you have any tips on how I can do budgeting better?”
Nobody wants to sit in front of a computer with a bunch of spreadsheets and stare at all the money that you once had but spent away.
But, sticking to a regular monthly budget with my husband was how I was able to:
- Leave my day job;
- Start my own business;
- Pay off my student loans;
- Pay off my house; and
- Have enough to retire in my 30s.
All of these things happened because it started out with a basic budget, but most people are doing budgeting wrong. Not because they’re trying to do it wrong. It’s a skill most of us didn’t learn to do well.
Here’s how you can budget better starting today to become debt free.
You Didn’t Schedule Your Budgeting Time
The most common reason I hear is not having time.
But I will counter that the average person subscribes to 2.8 streaming services, according to a recent survey.
We have the time. My husband and I only take an hour a month to plan our budget.
Not an hour a day, or an hour a week. An hour a month.
Start by showing up to that meeting with yourself and doing just one task to improve your finances for the month:
- Automate your monthly bills.
- Pay off your lowest debt.
- Move money from a checking to savings.
- Following up with customer service for an outstanding bill.
If you want to stick to a budget every month, schedule it for the same day and same time every month for one hour, and use that time to just get rid of the clutter you’ve been meaning to clean up in your money.
You Gave Up After Just A Few Tries
The idea of budgeting makes most people feel bad, in different ways. It could stress you out. Maybe it makes you anxious. Maybe you’re sad. Maybe you’re frustrated or even angry with you’re financial situation. Of course, you’ll avoid something that makes you feel bad.
If you’re feeling like it’s taking too long to learn how to budget, it’s because you’re still new to it. Would you scold your children for falling off a bike the first time they tried to ride it? Give yourself grace and six months to learn this new skill. Budgeting takes time to learn.
I will confess that the first time that I budgeted, it took hours to get everything together because we were trying to look at so many different line items.
But after about six months of regularly scheduled meetings, we got things paid off and streamlined. It became like brushing our teeth and part of our regular routine.
And after you’ve done it for a couple of months, you’ll see it gets easier and easier every single time.
You Waste Time Beating Yourself Up For What You Already Spent
Money feels tight for most people. The biggest mistake that I see is that they think budgeting is rehashing what’s already been done: the past mistakes they’ve made and the past choices associated with those mistakes.
Self-loathing won’t pay your bills.
Limit your review of last month to five to 10 minutes of your one-hour budgeting session, tops! It’s helpful to know where there might have been leaks or surprise expenses, but what’s done is done.
Budgeting is not about accounting for your spending and slapping yourself on the wrist. Budgeting is to make room for the things that you really want to do next.
Instead, spend the majority of the time to start planning ahead.
You Got Overwhelmed By Planning Too Far Ahead
I know I just said plan ahead. But it can feel like a losing battle when you try to think of every possible thing that can happen in the foreseeable future.
Focus on what is happening in the next calendar month and stop there. You will realize you actually have more control than you think you do.
Instead of listing out all the places where you must spend money, find an area that you feel you can control and be intentional about that spending, over the next month. Every month is different. Last month was travel. This month is food. Next month is shopping.
Budget one month at a time and focus on one area at a time. Don’t plan for next month, until you feel like this month has been handled well.
You Guaranteed Failure By Aiming For Perfection
A goal of 80% success is good enough. Type-A people don’t know what to do with this advice.
Here’s the truth. I have consistently done a monthly budget since July 2016. I’ve never once had a budget that went 100% according to plan. And I still became a debt-free millionaire.
Thinking your budget will be exactly right is an unreasonable expectation. It will never go exactly as planned if you’re living like a human, and not like a robot. And that’s what a budget is: a plan for you to finance your life in the next 30 days.
So consider it practice, even when your money is really tight. If you keep budgeting consistently, your money someday will not be as tight.
And then, you’re going to be so good at managing money that when you do have extra, it’s going to flow so much easier.
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