Why People Fail in Budgeting
Katilyn | October 24, 2022
Why is it that even when people see the value that budgeting can have for hitting their financial goals like debt payoff or wealth building, that they still fail to create and utilize a budget? Simply knowing that something is a good and healthy habit, does not mean people will automatically incorporate this habit into their lives. Like many other healthy habits in life, understanding why people typically fail to form this habit can help you overcome these common pitfalls and be on your way to hitting your goals.
They don’t know where to start
The act of starting something new can be intimidating enough of a reason to have some people avoid something that they know is healthy. In addition, if a person does not know what to do for a budget, taking the time to learn can be another step in the way to progress. The best way to overcome this is to start with a small step. Start by educating yourself on budgeting basics (see our article: Budgeting Basics ), find a YouTube video or start listening to financial podcasts throughout your day to start learning. Utilize a tool like Ploutos Budget app to guide you through the process and take the guesswork out of building the elements of a budget. Soon, you will find that you will be much more knowledgeable on the topic and the task will seem less scary.
It can be time-consuming or ineffective without proper tools
Budgeting doesn't have to be super complicated. Even writing down your budgeting goals using a piece of paper and pen is a better budgeting technique than having no plan. However, where people fail is spending so much time calculating numbers or organizing the financial data each month, especially if they are very detailed in their budgeting. Without tools to make budgeting efficient, you will be less likely to want to spend the time on budgeting, especially if your methods yield ineffective results. For example, if you spend time each month creating a budget, but then lose visibility of how much has been spent throughout the month and how much you have left to spend by category, it can be discouraging to continue budgeting when you are not getting the benefits of knowing you are on track for your money plans. You’ll be less likely to want to spend the time building a budget. As a solution, try a budgeting tool or app like Ploutos Budget, which can improve your accuracy, save time, and compile your budget into reports that help you better understand how your budget impacts your net worth.
Feeling discouraged if they don’t see progress
Even when people start getting into the habit of budgeting, if you don’t see how building your budget positively helps you in achieving your financial goals, you may be more likely to discontinue budgeting. You need tools and ways to track your progress in addition to your budgeting. Ploutos Budget has reports that show your progress toward your Net Worth. There are also reports, such as quick visibility to your largest spending categories that can help you troubleshoot and brainstorm ways you can make adjustments to your budget that help you align your spending with your financial goals. It also makes it easy to see your progress on sinking funds or longer-term goals when you can see this money grow month over month.
Lack of organization
Let’s face it. Organization is a skill that not all of us are blessed with. Even if you spend time building a budget, without clear organization, your plan can quickly fall apart and be completely ineffective. Find ways to keep yourself organized. This is why budgeting apps, like Ploutos Budget, exist.
Lack of discipline
Let’s be real, even with the best tools, time, resources, knowledge or education, habits still take a real element of discipline to form. Just like anything else worth doing, it takes practice and consistency over time to be effective. A couple of ways to build discipline and strong habits is by making the task as efficient and frankly, satisfying or fun, as possible. Find ways you can see how this habit is helping you achieve what you want out of life. This can be immensely satisfying. Make it easy to accomplish, which will mean you will be more likely to take consistent action.
Not having a strong enough “Why” or personal reason for budgeting
Like many healthy habits, many people acknowledge that they are “good” for you. However, people fail to take action on these habits when they do not personalize what that particular habit could mean for them in their lives. As a child, dreaming up the future comes so naturally. Somewhere along the road, we forget how to dream. We think of all the reasons something CAN’T happen instead of thinking of ways on how to make something happen. Soon, we forget how to dream altogether. After all, why dream if you don’t think it can become a reality? This can have a debilitating effect on your mental health and is no way to live. Give yourself permission to start dreaming again. Live life like a child for once and think about what you want your legacy to be? What do you want people to remember you for? What kind of person do you want to be? Identifying these big life’s purpose ideas can be extremely useful to providing a lens to setting financial goals that will allow these dreams to become a possibility. Do you want your children and grandchildren to have a purposeful life, better and even more impactful than your life? Does this involve saving money for college or establishing seed money for their business? Do you want to be outrageously generous? Are there people in life that you want to better serve? Do you want to have a house in which you can create family memories and traditions that deepen your kids and grandkids sense of belonging, love, and inclusion necessary for healthy self-confidence and mental health? Do you want to be able to create deep, loving family relationships and an expanded worldview through taking family vacations? All these dreams can only be made possible through intentional prioritization and action. Financial planning and budgeting can make your goals a possibility. Suddenly, budgeting is not just about making sure you have money. It becomes about achieving the life you want to live. It becomes much easier to stick to budgeting with this motivation.
Lack of Longer-term Financial Planning Goals
This one may sound a lot like not having a strong enough “why” in the section above, but this takes your “why” or overarching purpose in life, legacy you want to leave, or the person you want to be and puts all this into actual measurable financial goals that make these dreams a reality. If you know that raising kind, generous, healthy, and well-established children is a key element to one of your life’s purposes, then perhaps having a house in which to build that life is a key tool. Thus, you will want to set yourself a long-term goal of saving up for a down payment on a house. This is a MONETARY long-term goal. If you set some goals like this, you can quickly see how a budget can help make this a reality by seeing the dollar amounts build toward these goals. You will be less likely to give up on budgeting if you can see how it can help you hit these longer term financial goals.
Many of these pitfalls fall into one of two categories: lack of proper tools and lack of motivation. By addressing these obstacles, you can get on track to budgeting and hitting your financial goals. The Ploutos Budget app can help overcome every one of these pitfalls. It can make budgeting accurate, quick, easy and keep you organized by tracking your spending and showing how much you have left to spend at any given point in time in the month. It makes it easier to see how you progress toward your Longer Term goals through the inclusion of sinking funds built into your budget… without the need or extra work of creating separate bank accounts. You can utilize reports to see real progress toward your Net Worth. Or use the reports to create an even better financial plan by more clearly seeing how your actions impact your larger goals. A tool like Ploutos Budget can allow you to live the life you want to lead through strong and effective financial planning.