5 Reasons Why Traditional Budgets Fail

It’s been just a week into the month, and you can already see your monthly budget crumbling. Sounds familiar? Well you are not alone, as more than 82% of traditional budgets fail for one or the other reason. This article attempts to explore some of the common reasons/flaws that are responsible for the failure of traditional budgets.

1.) Unrealistic Expectations – One of the primary reasons why traditional budgets fail is because they are set on unrealistic grounds. It can be quite uplifting to think about saving money by drastically cutting down on your miscellaneous expenditures such as eating out, going for movies, outing with friends etc, but is it really practical? Is it possible for you to suddenly cut down your expenditure from 40% to ‘0’?
It is important to be very practical while drafting your budget. If you want to save money and cut down on certain expenses, do that in a logical and realistic way. Try minimizing your expenses slowly each month, till you can get it to an optimal level.

2.) Update your Budget – Another flaw in the traditional budgeting process is that it is not dynamic in nature, and does not change according to the circumstances or needs. Life can be quite unpredictable and it is important that your budget is in line with your current and future needs. To achieve this, you will need to update your budget each month.

Certain expenses such as insurance costs, car repairs, medicals bills etc, are spread out throughout the year. Accounting for each and every dollar you spend or plan to spend in a month is crucial for creating a successful budget.

3.) Following an “Ideal Budget” Plan – Traditional budgets are based on ‘one size fits all’ concept, which is probably another reason why they do not work. Your budget should be solely based on your lifestyle, needs, preferences, earnings and expectations.

Determine the amount of money you would need for different expenses throughout the month (essential and non-essential both), and sketch a budget that caters to these needs. An ideal budget plan is not the one that worked for the global economy, but the one that works for you.

4.) Improper Tracking – Have you ever lost track of your expenses, wondering how much you spent on shopping or eating out? If you tend to make multiple transactions throughout the day, then it can be hard to keep track of all of those expenses.
A smart strategy would be to track what you spend daily, where you note down each and every expense, even the smallest ones. This is a good way to track your expenditure, and will make it easier to accurately compare your actual expenditure with your budget. For an quick & easy way to do this, check out our budget tool, Spendtracker

5.) Take everyone’s Approval – Traditional budgets are similar to dictatorship, one person decides what is best for everyone else. But this does not work when you are a part of a family, as the needs of other members (your spouse, kids or parents) are also equally important. Either sit with your family and draft a budget for the month, or design a preliminary budget and present it to the family. Be prepared to explain/justify your budget decisions, and why it is necessary or in everyone’s best interest.

Don’t be frustrated with failure – it is common for your budget to get off-track occasionally. Rather than blaming yourself for making mistakes, examine why your budget failed and try to take corrective measures for it.

You won’t budget unless it is simple and easy to do

Just like trying to lose weight, saving money can be an elusive goal. Studies show that the more complicated the process, the less likely someone will stick to the plan.

Budgeting is no different & there are countless books, software, & programs that promise budgeting nirvana but many of these fall down in their complexity to use. Complexity takes time to learn & time to use & in today’s world time is one of the most precious assets you have.

Finding a balance between spending time working on a budget to actually achieving positive financial results is the key. Most programs require either hours of reading, learning, set up or all of these activities & even then lots of upkeep to maintain & review progress.

The Spendtracker has a distinct advantage to other budget programs: you take it with you as you shop & with it, you can proactively manage what you decide to spend your budgeted money on.

This is a simple but powerful concept that removes any timing excuses as to when the budget was set to when the money was spent. Knowing how much you have in your budget by each of 10 separate categories when you are out shopping gives you the knowledge & power to eliminate overspending. The Spendtracker takes minutes to set up & seconds to use yet will give you complete & constant control of your money.

It is the simplest, most effective budget tool all for the cost of a few gallons of gas!! Order the spendtracker now & take back control of your spending.

50 Budget Saving Tips

1. Set REALISTIC goals for future spending. Don’t fool yourself or your budget. Set goals you can live with so you won’t get discouraged. Use a Spendtracker !

2. Don’t pay banking fees. Shop around for a bank that doesn’t charge fees and you could save over $100 a year.

3. Start an automatic savings plan with your bank. Even small amounts added every pay period can compound to a large amount over time.

4. Open an online savings account. Most online accounts offer a 4% interest rate. That’s much better than the 1% you get at your current bank.

5. Avoid ATM fees. Only withdraw money from machines approved by your bank.

6. Use reward credit cards and get cash back or earn credit for rewards. A great way to save money or get free items.

7. Pay Bills on time. Don’t miss payments, you will incur late fees and it’s just not worth the extra money. Get organized and pay bills on time.

8. Pay Bills Online. You save on postage and avoid the risk of paying late fees if you have it automatically debited each month.

9. If you use checks, don’t buy them from the bank. Online retailers sell them for MUCH cheaper.

10. Comparison shop before you buy big ticket items such as TV’s, Computers, etc. Check out the price of all the stores in your area and search online for a better deal before you buy.

11. Use store rewards cards to save money when you purchase or to accrue credit at the store. i.e. Kroger, CVS, Office Depot, Staples, American Eagle, etc.

12. Buy as much as you can online. Save money on gas by buying online. Many stores offer free shipping if you buy a certain amount.

13. Bundle Cable and Internet or Phone and Internet. Many cable and phone companies now offer both in one package which can save money.

14. Cut out some of your cable channels. Do you really need 500 channels? Try downgrading your service and see if you really miss it.

15. Cancel Your Home Phone. If you and your family use cell phones, cancel the home phone, you probably don’t use it much anyway.

16. Consider VOiP telephone service. If you use the home phone a lot and can’t cancel it, try VOiP. Prices are lower and the service is great.

17. Use the library to borrow movies, CDs, books instead of buy them.

18. Cancel subscriptions. Read magazines and newspapers online.

19. Read magazines and books for free at bookstores. It’s becoming the next big hangout, meet friends, read, and it’s free.

20. Refill ink cartridges instead of buying new ones.

21. Use open source software like OpenOffice for your computing needs. It’s free or cheaper than the originals.

22. Use CFL Bulbs (compact fluorescent light) instead of regular light bulbs. These bulbs use 75% less energy and last 10 times longer.

23. Buy energy efficient appliances. Look for the Energy Star on appliances and lighting. Consider the annual energy cost and cost of product before you buy.

24. Use a programmable thermostat to control your heating/cooling bill. You can save 10-20% on each month’s bill.

25. Turn off the lights when not using a room.

26. Shut air vents in rooms you don’t use often. Shutting vents in unused rooms can save on your heating and cooling bill.

27. Change the filters in air conditioners and furnaces. Keeps your air cleaner and keeps your systems running more affordably and efficiently.

28. Keep insurance. Pay life insurance annually and car insurance semi-annually. Insurance companies charge you more if you pay monthly, quarterly or semi-annually. Pay yearly/semi-annually and you’ll pay less.

29. Raise your deductible on car insurance and home owners insurance. You’ll pay less on your yearly premium.

30. Say no to extended warranties on small items. A $99 two year extension on a $400 product is not worth it. Warranties are basically insurance, and you don’t need to insure such a small amount.

31. Take advantage of employer 401(k) matches. If your employer matches 401(k) contributions, do everything you can to take full advantage of that match.

32. Keep your tires inflated at the correct pressure. It keeps you safe and costs less on gas.

33. Keep your car well-maintained. Get scheduled oil changes and yearly tune-ups for your car. Keeping your car in good shape can save money down the road.

34. Buy a new car online. Search the internet for car inventory close to you and see what dealerships offer the best deal. If you have to drive 50 miles to get a new car for $5000 less, it’s definitely worth it.

35. Don’t buy hot gas. Buy gas during the morning or evening hours, when it’s cool, or you will be buying gas at a time when it’s expanded (and thus getting less).

36. Carpool – Find other colleagues to ride to work with or carpool the kids to school and after school activities and share costs with other workers/parents.

37. Stop smoking & reduce/eliminate alcohol consumption.

38. Eat leftovers. Find new recipes you can use to re-use the meat or vegetables from the night before.

39. Take your lunch to work at least a few days a week

40. Eat right and exercise daily. You’ll reduce health costs. Start doing something NOW

41. Buy generic over-the-counter medicines. Same product, less-cost. Ask you pharmacist if there is a generic product for the medicine your doctor prescribes.

42. Get a 3 Month Prescription of your medicine. If you take a prescription medication on a regular basis, ask your doctor to write a three month prescription. Instead of paying three co-pays, you only pay one.

43. Use grocery store coupons. Challenge yourself to make a meal with only products you have coupons for.

44. Try the store brands. Brand names are often no better than generic. Give the store brand a try.

45. Don’t go grocery shopping when you’re hungry. You’ll spend more and buy more things that you don’t really need.

46. Make a list when you grocery shop and STICK to it. This way you’ll avoid purchasing items that look good and you’ll only get what you need.

47. Avoid buying clothes that require drying cleaning.

48. Buy your winter clothes at the end of winter/beginning of spring. Buy summer clothing at the end of summer/beginning of fall. Sales at the end of the season offer great savings for the next year.

49. Book your flights and cruises way in advance. You can get lower prices.

50. Take long weekend trips within a few hours drive of where you live instead of big overseas trips. Even though gas is expensive, it still beats the costs of air travel, car rental, etc.