Sticking with a budget requires persistence and planning. Don’t feel bad if you find yourself facing budget challenges; two-thirds of Americans don’t even have a budget! Some may create a budget but find it difficult to tackle the challenges of budgeting. However, with determination and proper preparation, you can overcome your budget challenges and get on the highway of financial success.
Why budgeting is essential to your financial success
By budgeting, you know exactly where your money is going each month. If you don’t budget, you will find yourself short on money and not properly saving either. Creating a budget and sticking to it, ensures you don’t overspend, and it prevents you from living paycheck to paycheck.
Budgeting helps you pay off debt, save money, and helps you grow your money by investing. A budget can also help you to learn to live below your means, so you stop spending your hard-earned cash on things you don’t need.
10 Budgeting challenges and what to do about them
Check out these 10 common budget challenges and key steps you can take to tackle them.
1. Being indecisive about finances
There’s nothing worse than being indecisive about finances. Financial indecisiveness can stop you in your tracks and prevent you from accomplishing your financial goals. Just the thought of even making a budget may be overwhelming, but the most productive thing you can do is to just start.
The more you procrastinate, the longer it will be before you take control of your finances. Indecisiveness is one of the biggest challenges of budgeting, but with a little financial motivation, you can successfully tackle this budget challenge. There are a couple of ways to combat financial indecisiveness.
Start by creating your budget
No one starts their life running. We crawl, then walk, then we run. The same applies to overcoming indecisiveness. The very first thing you should do is create a budget. Don’t dwell on what challenges of budgeting will bring; just focus on starting. Once you make your budget, then you can work on budget challenges as they arise—one at a time.
Automate your finances
By automating your finances, you are setting up your bills to be paid automatically every month. This step can help ensure your bills are paid on time and take some decision-making pressure off of you because your finances are on auto-pilot (to an extent).
Get financial help
Getting help with your finances is a fantastic way to overcome financial indecisiveness! We offer tons of Free courses and resources to help you reach your financial goals. Don’t forget to grab a copy of our personal finance books, and be sure to check out our podcast too, for financial motivation!
2. Shopping impulsively
One of the hardest budget challenges to overcome is impulsive shopping. Most people are guilty of impulse shopping. In fact, Americans make 156 impulse purchases every year. The average spent on impulse purchases is roughly $450 a month, costing over $5,000 a year!
Have you ever seen the movie Confessions of a Shopaholic? Can you relate to the thrill of purchasing a new purse or pair of shoes only to be devastated when you open your credit card bill? If so, you may have a shopping addiction, and this is devastating to your budget. Here are a few ways you can overcome your impulse shopping habit:
Figure out your triggers
Most of the time, impulse shopping stems from a deeper issue. Figuring out what is really wrong rather than shopping when you’re upset can help prevent shopping impulsively. The next time you have the urge to shop, take a moment to write down how you're feeling and what happened that day. You may be surprised that shopping is just a coping mechanism, and the first step to recovery is asking for help.
Limit shopping trips and online shopping
Shopping is a lot like dieting. The temptation is everywhere, and sometimes it’s simply easier to limit your exposure. Limit the number of times you go shopping and avoid stores for a while that you know are your weakness. This applies to online shopping too. Do your utmost to not “browse” the shops until you can resist shopping impulsively.
Give yourself an allowance
We all need to treat ourselves once in a while, but be sure you make it budget-friendly if you do. Allocate a set amount of money as an allowance for your shopping trips. This way, you don’t overspend, but you can still enjoy yourself.
3. Not having financial goals
The key to overcoming the challenges of budgeting is having financial goals in place. If you don’t have a clear goal in mind, it can cause you to lose focus on why you created a budget in the first place. Financial goals can motivate you to stick with your budget and become financially successful.
- Saving for a vacation
- Building an emergency fund
- Paying for a wedding
- Saving for a home down payment
- Planning your retirement
It’s important to make short-term and long-term financial goals. By making short-term goals, you can break those pie in the sky goals down into steps and make them easier to accomplish. Sit down and make a list of all your financial goals.
4. Not using the right budgeting method
When it comes to budgeting methods, it’s not a one size fits all scenario. One of the reasons you are facing budget challenges may be because you are using the wrong budgeting method. There are many budgeting tools and templates to choose from, and the trick is to find the one that suits you best.
Here are a few budgeting method examples for you to research:
- Reverse budgeting
- Zero-based budgeting
- Percentage breakout budgeting
- Cash envelope budgeting
Be sure to pick a budget that comes easy to you and that you will stick with!
5. Fear of facing debt
Ignorance is bliss, but it’s devastating to your finances because you don't have a financial plan in place. The thought of sitting down and adding up just how much debt you have can be one of the most difficult budget challenges yet. However, the only way to regain control of your financial future is to create a debt payoff plan with your budget.
Avoiding your debt will only make it worse and can damage your credit too. Learn about the various ways you can tackle your debt and build it into your new budget.
6. Eating out too much
One of the most common challenges of budgeting is eating out too much. The average spent on dining out in America is a whopping $3,000 per year! That’s a huge chunk of money that could bulk up your emergency savings account for a rainy day. Eating out seems convenient, but it “eats” up your budget fast.
Let's say you spend $10 a day, five days a week, eating out for lunch. That's $2,600 you could save simply by packing your lunch. Make your first goal to pack your lunch every day instead of eating out. The easiest way to keep from dining out too often is to create a meal planner and prep your meals. This way, you already have delicious meals ready to eat.
7. Not budgeting for savings
Even if you’re paying your bills on time, it doesn’t mean you are budgeting correctly. For example, if you aren't building savings into your budget then you aren't preparing for your future. One of the most important things to do when budgeting is to pay yourself first. The quickest way to save money is to build it into your budget. This way, you aren’t tempted to spend it, and it becomes a good money habit too.
To get started, save a certain percentage of your paycheck or a set amount to be deposited to your savings account. You can even set up automatic transfers to your savings to ensure you do it regularly. Make saving money fun with one of these money-saving challenges!
8. Not budgeting consistently
As with most things, consistency is the key to a successful budget. Budgeting consistently prevents you from overspending and keeps you on track financially. Stay the course with a budget calendar to be sure you are paying your bills on time and sticking to your budget. You also want to update your budget frequently to ensure everything is correct. For instance, if your bills increase, or your income changes, then you need to be sure your budget is up to date. Schedule a budget review on your calendar as a reminder to review your finances consistently.
9. Racking up credit card debt
It’s way too easy to reach for that magical plastic card every time you shop. However, unless you pay your balance in full every month, you spend way more than you should for those must-have items. Credit card debt is expensive, and high-interest payments can destroy your budget.
Rather than racking up debt, build up your savings and emergency fund instead. Paying for items upfront rather than charging them on your credit card can save you hundreds to thousands of dollars. If you find it hard to resist charging your credit card, lock it up in a safe space rather than carrying it in your wallet.
10. Unexpected expenses
Life is full of unexpected expenses, and this is one of the hardest budget challenges to tackle. That’s why it is vital that you build up your emergency savings account because you will be prepared for the unexpected. Things like car repairs, medical expenses, or losing your job can throw you off track.
The goal is to save 3-6 months of living expenses to cover any unexpected expenses. To keep from being overwhelmed with a high number, work on saving your first $1,000, and build from there.
You can tackle your budgeting challenges
Overcoming the challenges of budgeting can help you stick with your budget and help you manage your money successfully. Remember that picking the right budgeting method is crucial to your success. Don’t forget to make a list or a vision board of your financial goals to keep you motivated. Get started tackling these budget challenges with our Free courses and resources!