Episode 80: 17 Reasons Your Budget Is Broken

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What You’ll Learn

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• You’re An Optimist (00:50)

• You’re Not Reconciling Regularly (01:44)

• You Don't Have Family Buy-in (03:30)

• You Don't Actually Know the Cost of Things (05:26)

• You Aren't Aware of What You Really Make (07:03)

• You Don't Actually Know What You're Spending Right Now (08:30)

• You Forget About Infrequent Expenses (10:02)

• You Don't Get (or give) Your Spouse an Allowance (11:45)

• You’re Staying in Budget, But Only by Borrowing to Cover Overages (14:38)

• You (or your spouse) Isn't Practicing Self-control (15:50)

• You Don't Have Any Savings or a Buffer (17:00)

• You Have an Overcomplicated System (19:17)

• You Got Overwhelmed, Shut Down, and Said, "Screw It" (20:25)

• You Don't Have a Good Reason TO Stay in Budget (a WHY) (22:00)

• Your Budget Isn't a Living Thing (22:50)

• You Hate the Word 'Budget' (Mindset!) (24:00)

• You're Human (26:05)

• Recap (27:05)

• Invitation (28:25)

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You have been talking...and we have been listening...so here it is...17 reasons your budget isn't working for you...because who wants a list of 5 or 10 when you can have 17?! 

You're an Optimist (it's Not a Realistic Budget)

You had $400 planned to feed your family of 5 and you keep going over, but you keep telling yourself you'll do better next week...but here's the truth...that budget has PROVED it's not working for you...

So what do you do?

Here are 3 practical tips for getting back on track (without losing your optimism)

1. Take note of what you've actually been spending in that category.

2. Reconcile that category with your overall income (to make sure you aren't out spending your income).

3. Create a new budget, choosing small incremental changes to reduce that category by.

You’re Not Reconciling Regularly

Reconciling is essentially matching your own spending records with the records of your bank and your card companies. This might feel unnecessary in such a technologically advanced world, but we're here to tell you we've actually been charged more than we should have in the past...plus if you're reconciling regularly...you have a much better relationship with what is coming and going....and that is just good adulting y'all.

So what do you do?

Here are 3 practical tips for getting back on track (and start reconciling regularly)

1. Start logging your expenses regularly...Find an app or a program (like Every Dollar, Quicken, You Need a Budget).

2. Choose a day/time to reconcile (If you have a buffer in your account...choose ONE day/week … if you don't have a buffer yet, this should be 2 – 3 times a week.).

3. Reconcile your accounts on those days!

You Don’t Have Family Buy-in

You might be the money master in your home...maybe it's your husband or your kids that are contributing to the budget overages the most...and that probably means you've been making unilateral decisions and there's no buy-in from them. This is a situation that needs intentional action, but also grace, because anytime you're dealing with people AND money, there's emotions involved.

So what do you do?

Here are 3 practical tips for getting back on track (and bringing your family WITH you)

1. Start with you. Make sure you are keeping YOUR budget promises first and foremost. Because if you want your people's buy-in, you need to make sure you are bought-in first.

2. Sit down WITH your people and address the budget TOGETHER...because if you want their buy-in you need to listen to their ideas, suggestions, and what's important to them. ...this also means you may need to relinquish control and make room in the budget for some changes.

3. Set some goals and rewards because we're all motivated by good things and sacrificing things is a little easier (especially if you're new to doing it) when there is something to look forward to at the end. For instance...if we stay in budget and don't eat out...we can use $___ of what we save to do a celebratory ice cream night at home!

You Don’t Actually Know the Cost of Things

This is a huge challenge, because so many prices are changing on the daily right now. But it's also a very common budget buster because I think as a whole we don't pay attention to the individual prices of things and that becomes a problem when you're suddenly over budget by $50-$100. That goes for groceries, eating out, monthly bills (like electricity), quarterly bills, etc.

So what do you do?

Here are 3 practical tips for getting back on track (without spending blindly)

1. Understand the difference between a want and a need and make sure your people do too. We can't choose how much we pay for electric...but we can choose to put something back at the grocery store, or to skip that energy drink, or wash the car at home.

2. Keep a regular log of all expenditures (again on an app or the computer, or just in a notebook) because you need to know what you're spending.

3. Start notating where costs are unreasonable, and can be reduced or cut from the budget. Because you can't make changes that you can stick with if you don't first understand what you're spending and what your needs are.

You Aren’t Aware of What You Really Make

This is actually far too common for far too many people. We have a rough idea of what numbers hit our account every other week, or twice a month...but have you written that down on paper? Does your spouse do all the finances and you don't actually know how much is coming in? Are there any funds coming in from side hustles...babysitting, etc. That you aren't including in the budget (because that's the FASTEST way to make sure that money isn't spent intentionally)...If you don't actually know what's coming in...you cannot possibly hope to stay in budget or to make an accurate budget.

So what do you do?

Here are 3 practical tips for getting back on track (with the money coming in)

1. Have a conversation with your spouse and review how much money is coming in from any and all sources AND how often...and write. It. Down.

2. Use those numbers to build your monthly budget (if you have flexible income, be SURE not to budget down to the dollars...leave a very reasonable buffer for fluctuations.

3. Have a plan and be ready to pivot and make changes if needed.

You Aren’t Sure What Exactly You’re Spending Each Month

You may just be buying what you need and saying...well, we have to eat....
or maybe you're a step ahead of that and you have a rough idea of what's coming and going...but you might not be keeping track of when those amounts are sneaking over the line or when miscellaneous expenses are sneaking into your spending habits.

If you spend on average, $6 a day "extra" it works out to $42/week but that shakes out to  $2,184/year....what could you do with an extra $2,000?

So what do you do?

Here are 3 practical tips for getting back on track (and becoming aware of what you're spending)

1. Get an app or if you already have an app...

2. Download or log all your expenses from the previous month (pretty much all the apps have it to where you can easily just download them from your bank/card websites).

3. Categorize everything and intentionally review the amounts in each category (this might surprise you!) 

You Forget About Infrequent Expenses

That bi-annual insurance payment, every 3k miles oil changes, or those annual HOA dues can sneak up on even the most experienced budgeter...and those infrequent expenses or bills aren't small...So you can't afford (quite literally) to forget or ignore them.

So what do you do?

Here are 3 practical tips for getting back on track (without getting surprised by unexpected bills...that should have been expected)

1. If you've been budgeting...look back through last year and review it to determine where big bills were due.
   If you haven't been budgeting...start now and write down any big bills that come to mind along with their amounts.

2. Add these infrequent expenses to your budget on a recurring basis (PRO TIP: have them pop up a few weeks before they're due and stagger them if possible or schedule them for tax season).

3. Create a new budget category to help you set aside the necessary money for it each month.

You Don't Get (or give) Your Spouse or Children an Allowance

Chances are 'allowances' are being spent either way, so making space for them, and defining a set amount can make a huge difference in overspending. This also reduces a lot of pressure (or guilt) on the more financially minded individuals because the 'spender' can use their money any way they want, and that includes saving up to get something bigger. You don't have to tell them 'no' constantly, instead you can go from the enforcer to the encourager.

So what do you do?

Here are 3 practical tips for getting back on track (and making space for spending)

1. Look at your budget and determine any extra that you can set aside for spending
   Some of you might be tempted to say, well we just don't have the extra for that...but I'm almost positive you can find $10 to split between you and your husband...

2. Divide the extra (no matter how small) between the parents first and set aside some for children.

3. Get the spending out in cash and use cash for your spending.

• This keeps you honest to your spending.

• It's easier to carry over any extra without it being eaten up in the budget overages.

You're Staying in Budget but Only by Borrowing to Cover Overages (and this might be from credit cards...but it might be from your own savings as well.)

The big point here is this is faux budgeting...and the harsh reality is that this is not sustainable. You know that, we know that...but it's still worth saying because alllll of us have done this at one time or another...and some of us have made a habit of it....especially lately.

So what do you do?

Here are 3 practical tips for getting back on track (with your real budget numbers)

1. Determine how much you're "borrowing" to balance out at the end of each month.

2. Readdress your budget to reduce by that amount....and try to spread the love to avoid making pitfalls for next month.

3. Reconcile more often (because your budget is a living thing and may need adjusting as expenses fluctuate).

You (or your spouse) Aren't Practicing Self-control

This is potentially a sticky subject...and obviously there's a reason for that. Self-control is a hard...especially when we start to feel trapped, or we're repeating broken soundtracks like, "what's the point?"...Here's the thing though...we can grow and learn and that applies to self-control as well...and when it comes to money and our families, we must.

So what do you do?

Here are 3 practical tips for getting back on track (and taking control)

1. Make sure you and/or your spouse have spending money allocated in the budget.
   If not, find a way to include a reasonable allowance.
   If so....practice telling yourself 'not yet'.

2. Start with yourself...however this does NOT give you the right to save it up like ammo to use against your spouse.

3. Check-in and make sure the spending is reasonable for your needs and your budget.

You Don't Have Any Savings or a Buffer

If you're asking yourself what a buffer is...chances are you don't have one. I think everyone knows what savings are...but it's one of those things that gets pushed off the table the quickest when it comes to over-spending your budget. But here's the thing, there will be an emergency just about every month...Dave Ramsey really hits home the importance of an emergency fund and we feel the same way. It goes SO FAR in keeping you in budget when it comes to overages....and as far as a buffer goes, this is almost like invisible money in your account that never gets spent, but is always there to avoid overdrafts. It's only meant to cover expenses between paychecks...NOT to use as an emergency fund.

So what do you do?

Here are 3 practical tips for getting back on track (and keeping your savings in check)

1. Get one. Set an ideal amount and break it down into super simple steps that can be achieved (Start with $100...look first within your budget and make it a non-negotiable expense...bonus points if it's an auto-draft into your savings – before you even see it).

2. Sell things, take on some extra babysitting or a side hustles, start a lemonade stand (your cutest kids can make bank...). You need one. Period. Put in the work to make it happen.

3. Don't TOUCH IT.
   If it's an emergency fund it needs to only be used for emergencies...and replenishing it needs to be prioritized once it's used.
   If it's a buffer, you NEED to get good at ignoring it and pretending it doesn’t exist...and it should NEVER go without being refilled at the end of every month.

PRO TIP: Start saving for your kids based on their age.

You Have an Overcomplicated System

If you're using apps, envelopes, a book, some dvds, a note book, a box for filing....chances are your system is way too complicated. The more complicated your budgeting set-up is, the harder it's going to be to stay in budget. Less is more here.

So what do you do?

Here are 3 practical tips for getting back on track (and using a system that actually works for you)

1. Figure out what type of budgeter you are. What do you work best with? A program on your computer? An app on your phone? Using only cash and envelopes? A paper budgeter?

2. Choose the system that you will respond to the best and stick to it give it 3 months of dedication before you swap to anything else.

3. Resist the urge to swap to shinier budget systems when FB sends you 20 adds for them after you choose one.

You Got Overwhelmed, You Shut Down, and Said, "Screw it!"

Well if this doesn't describe the average American at least 2-30 times a month...I don't know what does. Right now it's very hard not to be overwhelmed and have trouble sticking to a budget because we've been in the trenches with you and it's really difficult to roll with the constant hits and keep pivoting with the budgets....it's much easier and much more gratifying (in the moment) to just say "meh" and spend whatever you want or think you need to and leave the problem it creates for tomorrow's you.

So what do you do?

Here are 3 practical tips for getting back on track (after you gave up or you're ready to)

1. Go get yourself a treat. Take a pause. Take a deep breath. Take a nap even.

2. Come back to your budget with fresh eyes and your spouse...**it's like coming going grocery shopping when you're hungry....don't come to your budget when you feel the most poor or desolate....look at the biggest pain points in your budget and make a better plan for them. Money can always be shifted, our budgets are a living thing...you can make a change this month on a pain point and swap it the next month. We're going to cancel Hulu & Disney+ and put that back into spending for this month.

3. Set-up a reward for when you hit your budget goals.

You Don't Have a Good Reason TO Stay in Budget (a WHY)

Staying in budget is hard. Managing your money and the emotions surrounding it is hard. So we need a really good reason when we inevitably come up against that resistance.

So what do you do?

Here are 3 practical tips for getting back on track (finding your why)

1. Talk with your spouse (invite your kids in if that would be helpful) and decide on a why or a goal that everyone can be excited about.

2. Write it down and post it EVERYWHERE.

3. Live it, breathe it, read it every day. Because if we don't actively keep it at the forefront it will get pushed aside for the flavor of the week.

Your Budget Isn't a Living Thing

All budgets are a living thing...it's not a set-it and forget it kind of thing. In fact it's actively fluctuating by the day for many of us. Yesterday I didn't have $500 in medical debt...today we do and we have to pivot. This is a little bit mindset, a little bit wizardry, and a little bit tactical.

So what do you do?

Here are 3 practical tips for getting back on track (when you thought your budget was set)

1. Accept that your budget is going to require time and attention each month (and more likely, each week) and little adjustments will be necessary to stay within the bounds of your income.

2. Set aside time each week (or every few days) to check in with your spending and expenses.

3. Make little adjustments to account for variations in the spending. Reallocate any unspent categories and do your best to accommodate overages within your income without going into savings.

You Hate the Word 'Budget' (Mindset!)

If budget is a sticky word for you...you can name it anything you want...you like the name Susan...Susan's your new budget. Snickers? Snickers is the new nickname. This is really a mindset shift...not necessarily a financial or tactical shift...those might be necessary, but a mindset shift is primarily what's needed here because too many people view budgeting in the context of loss, aka...what has to be reduced or cut instead of as an opportunity to make intentional decisions to spend based on core values and goals.

So what do you do?

Here are 3 practical tips for getting back on track (without losing your mind)

1. Look for sticky thoughts/feelings...and often it's not even about the money...Maybe it's from years of seeing your parents fight over the budget. Maybe it's about a fight you had with your spouse about money. Maybe it's the thought that "More money could fix or solve...." Maybe it's "I'm just bad with money". Maybe it's "There will never be enough money to do the things we want..."

2. Hug them/write them down/make peace with them...and let them go.

3. Write a new soundtrack (get help if you need it...google it! There are tons)

Budgeting doesn't have to be a source of pain or contention in my marriage.

I can learn to work with my spouse in a way that will serve both of us.

By honoring the money I have I can open new opportunities for more.

I can learn how to handle money better and that begins today.

My capacity to hold and grow money expands.

You're Human

So what do you do?

Here are 3 practical tips for getting back on track (because life is hard sometimes)

1. Give yourself grace! We are just human. You might be brand new to budgeting, or maybe you're winging it because you've never been taught how to budget...or heck, maybe you may have been taught and you just fell off the bandwagon...it's okay...because you're here now and with a little grace you can pick yourself back up.

2. Start again and remember that starting again has no expiration date.

3. Educate yourself. Even if you're a seasoned budgeter...there is always more to learn...take time to be a student of yourself and your budgeting AND other people's budgeting. 

RECAP

1. You're an optimist (it's not a realistic budget)

2. You're not reconciling regularly

3. You don't have family buy-in

4. You don't actually know the cost of things

5. You aren't aware of what you really make

6. You don't actually know what you're spending right now.

7. You forget about infrequent expenses (qrtrly/6mo/annual renewals)

8. You don't get (or give your spouse an allowance)

9. You’re staying in budget, but only by borrowing to cover overages

10. You (or your spouse) isn't practicing self-control

11. You don't have any savings or a buffer

12. You have an overcomplicated system

13. You got overwhelmed, shut down, and said, "screw it"

14. You don't have a good reason TO stay in budget (a WHY

15. Your budget isn't a living thing

16. You hate the word 'budget' (mindset!)

17. You're human

Invitation

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