Why Budgeting Doesn’t Work

One of the questions I’m asked most about is how to properly do a budget.

I’ll be honest with you…even I hate budgets. It’s tedious, it is restricting, and every time I’ve gotten overly focused on a budget it actually has put me in a bad mood where I became worried about finances and worried about what I can or can’t afford.

And the reason is that most people budget backwards. And it’s okay, that’s how I was taught to do it too.

Tell me if this sounds familiar.

Money gets deposited and the month begins, and we do 1 of 2 things:

1. We sit down and look at how much there is and how much we can spend. We realize that it’s pretty tight so we look at what we can cut back on and then spend the rest of the month trying not to overspend. Usually, we save very little or we save nothing and if we do save something it’s often what’s “left over” at the end of the month.

2. The money comes in and we don’t do a budget and at some point, during the month we notice the bank account is getting pretty low or maybe the credit card balance is getting high. So, we then do a half-way budget and try to make do with what’s left. Usually this means no money gets saved.

The reason this system doesn’t work is that the focus is backwards.