The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
Navigating 5 Roadblocks of Budgeting
Many people stress about facing their finances, and respond to the word budget with a fear of deprivation, restriction and failure. In three words: Budget = bad feelings.
It’s overwhelming to start (or get back on track with) planning for expenses, monitoring spending and staying on course toward goals. The reality is that budgeting isn’t easy — at first. If you stick with it consistently, you can get to a place where budgeting is habitual, effective and financially life-changing.
So “budget” doesn’t have to be a bad word! It’s a solution for disorderly money management. It strengthens your relationship with money, and it’s a system you can feel good about. By turning a budget into an ally, you can stop being at war with your finances.
A word of caution! On the path of budgeting, you will encounter common roadblocks. Prepare to face challenges that lie ahead and get tips below on how you can get around them.
Not Knowing How to Start
For first-time budgeters, there are two words for overcoming the anxiety of getting started: BABY STEPS — or start small works too. Budget apps are excellent tools for controlling your financial life, but if you’re new to the game, start by focusing on one thing first. It can be very basic like simply writing down a mini objective in a notebook.
Example: Set up a grocery category, allocate the funds and commit to eating lunch out only once a week.
Once you start to feel comfortable with budgeting for groceries and cutting back on eating out, introduce something new to your budget.
Example: Establish a long-term goal, like “pay off credit card.” Then break it down into a smaller, very achievable mini goal, like “pay $150/month toward the balance.” Aim to contribute an amount that’s a bit higher than your minimum balance.
As you continue to add categories and goals, you’ll eventually have a budget created. Then you can download a budget app to take your budget practice to the next level!
Living in the Moment
One big piece of life advice is to live in the now for a better and fuller life! There’s an exception to this rule though, and that’s unless you’re managing your money. If you were to bring financial binoculars to your eyes, what does your destination look like? It’s important to ask yourself, what kind of future do I want to have? What’s my vision? Who do I want my future self to be?
Think about it like your physical health. The motivation for practicing healthy habits now is so you can lower your risk for disease, age better, live longer and be there for your family decades down the road. The same goes for your finances. If you want to buy a house in five years, your goal may be to pay off debt before having a mortgage. If you want your golden years to be a dream, you should contribute to your retirement. What type of future you envision dictates how to save and spend today.
Building a False Sense of Security
We may think of our possessions like a big house, full wardrobe or nice car as needs that give us security. This false sense of security can also come from excess: buying multiples and in bulk. By accumulating more physical possessions, we tend to feel more secure. But what we should focus on is financial security — for emergencies, big goals and retirement. Strive for growing monetary security in your bank accounts, rather than growing a stockpile of things in your home.
Giving in to Peer Pressure
Just like going on a diet, it’s hard to stick to a budget when you’re tempted to spend because of your social circle or co-workers. Do your friends love to plan weekend getaways? Is happy hour a weekly ritual with your work buddies? The struggle to say no is real. If keeping up with your spendy friends (or co-workers!) is draining your finances, you can find great advice in our video on how to save money and your social status. Our environment has a huge influence on our actions. Identify your financial values and shore up the willpower to resist temptations that misalign with your budget.
Acting on Bad Excuses
“Life’s too short!” “I’ll save more when I can make more.” “What’s the point of money if you can’t enjoy it?” “I absolutely cannot live without [your vice].” Sound familiar? These are excuses holding you back from living the good financial life! …not mental permission slips to justify spending freely, excessively and carelessly. The first step to remedying bad budgeting behavior is to acknowledge times when you make an excuse. Then replace these excuses with reminders of your goals, how much your savings has grown, or how much your credit score’s increased. Shift your mentality, and shift your finances in the right direction.
Now that you know the signs of future roadblocks, you can start to befriend a budget and grow your relationship. There will be ups and downs, achievements and failures. As it’s been said before, “trust the process!” You’ll start to experience emotional rewards like feeling guilt-free and excited when you can buy something you want that you’ve budgeted for. The high of seeing debt go down replaces the high of impulse buying. Going from a non-budgeter to a budgeter is both a lifestyle change and life-changing.