Budgets don’t workPosted: October 28, 2011
Okay calm down, I haven’t lied to you. Don’t throw anything at me through the computer screen—not even a glare. Trust me my own budget loving self is beating the other part of me up right now. Let me explain and I’ll show you what I mean.
Budgets don’t work if you treat them like a diet or do the whole “I know what my budget is in my head; I don’t need to write it down or track anything”. (By the way this is a generalization so don’t hate too much)
Let’s take the diet approach. I hate dieting with a passion. I’m never good at it and always find that after the first few weeks I’m back at the same weight or, even worse, at a higher weight. That’s because (most) diets make you go cold turkey or limit you too much. Say one day you want a cookie—but your diet doesn’t allow it. So like the good dieter you are you ignore this cookie craving. But it just gets worse and harder to ignore this craving. Finally the day comes when you break for whatever reason and give in. But instead of that one cookie, you eat the whole batch. That’s what our first budget was like (and I shudder to use the word budget). There was no wiggle room—everything went to bills, food, and savings. After a month and a half, we cracked. There was no end to the monotony and we took that savings and “borrowed” from it. We went out and ate, bought a bit more groceries and just plain splurged. Oh and we never paid it back.
Now for the second approach. I know that I know my budget by heart but still, mistakes happen—and I was constantly looking at it the first few months I had it set in place. Just the other day, I was looking through my money and couldn’t fathom where $60 was supposed to go—I had forgotten the category. Thankfully I looked it up and it went to its rightful place. Initially it’s so easy to underestimate where you spend and what you spend your money on. So even though you have a “budget” you could still find yourself with less money than you should—or in the negative as you had to borrow or charge to make it through.
What I do is actually create a list of expenses, personal money, and savings that need to come out of the paycheck. This works wonders for me as I know how much is needed (after tracking a few months) and additionally provide a bit of wiggle room in our budget.
Did you ever try the no paper budget or the diet budget? How did that work for you? Do you have wiggle room?