11 reasons your budget isn’t working, how to fix it, and save money

I can totally understand that budgeting is not something everyone wants to spend their free time on.

I mean, the sun is shining and you’ve got a pile of receipts in front of you. Who wants to put purchases into a spreadsheet anyway?

Unfortunately, proper budgeting does take some effort. However, it is well worth the ability to reach your financial goals and live a financially responsible life. So where do we go wrong with budgeting? Why do our budgets not seem to work out?

Here are the top reasons why budgeting fails for most people. Once you finish reading this article, consider checking out how to build an awesome family budget that works so you can see examples of how effective budgets are created.

If your budget isn't working, it isn't too late to fix it. You may be making common budgeting mistakes and a simple change can help you save more money. When you budget effectively, you'll be able to pay off more debt and live a happier financial life.

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11 Reasons your budget isn’t working, how to fix it, and save money

1. You don’t have a plan for your money

A budget is a way to track your finances in which every dollar in your bank account is already determined how it’s going to be spent. If you have $10,000 in your bank account then your spreadsheet should allocate all $10,000 to your expenses and savings.

For example, your budget should show your $10,000 split between savings, food, rent, utilities, etc. At the end of the month, all of your income should be dedicated to specific categories.

A lot of people decide to not budget and are just cautious with how much money they spend each month. While it works for some people, it’s not a good system because you don’t have money set aside for specific categories and you might find it difficult to pay for emergencies.

Feel like your budget is lacking or that you want to save more money? Consider joining our free course on budgeting and saving money. The course is full of tips to help your family save more money!


2. You don’t save money for your goals

Budgeting is all about allocating your money into specific categories so you can know where you stand financially. Without budgeting, you could buy yourself an expensive item and then struggle to pay for an unexpected car break down.

It’s best to use budgeting to save for life’s emergencies and your financial goals. You might dedicate $75 per month to auto repair and $50 a month for the item you really want.

You’ll have money set aside for auto repair and still have money saved for your goals.

It’s easy to look at your bank account and see a large chunk of money and say, “I should go buy something with that money.” The reality is that money should be allocated to categories, like emergencies. Your large chunk of money may not go as far as you would think.

3. You don’t make enough money

You have a great looking budget, reduced your expenses next to nothing else, and still struggle financially. Sometimes we have to admit that we don’t make enough money.

Larger cities are always harder to live in. That’s because the cost of living is absurdly high and the incomes don’t always pay enough to cover your expenses. Someone living in Seattle and working at McDonald’s will struggle to pay rent.

The best thing you can do is to Google the average household income in your city. That is the income that you need to strive to be making.

Seattle's average household income
Seattle’s average household income

4. You haven’t reduced your expenses enough

Reducing your expenses is a hard thing to do. We all work hard for our money. So why wouldn’t we want to blow off some steam and order Pizza more frequently?

Sometimes that means you need to reduce your personal spending category from $100 per month down to $50 or $20. Other times that means giving up cable or eating out less. You may need to identify any other category that is eating away at your money.

If you have a budget already set up it should be easy to see in what categories you’re struggling. You’ll also be able to see in what categories you’re doing great. It’s hard to cut out fun activities, but sometimes it’s necessary.


5. Your budget is too restrictive

Sometimes it feels like you can’t have any fun in life when you’ve cut your expenses down to next to nothing. You’ll start to get irritable when you can’t have any fun! When you’re irritable, you just want to have fun and don’t care at what cost!

Maybe you budget yourself having $20 worth of free spending money. Sometimes $20 of free spending is too restrictive for your personality. You might splurge and spend $100 or more because you’ve had it with “being an adult.”

I struggle with $20 worth of free spending money every month. That is unless I’m so busy that I just don’t have the time to spend money. I would do much better with $40 per month of free spending money and not overspend nearly as much.

Life is about finding the right balance. You’ll need to reduce spending in one area of your budget if you want to increase your personal spending.

6. You haven’t adjusted your budget

Budgeting takes constant adjusting. Every month my wife and I sit down and talk about where we are allocating our money. If we are struggling and spending too much on food then we have two options.

We can either spend less money every month on food or add more money to the food budget. Adding money to a specific budget usually means reducing money in a different category.

7. Your spouse isn’t on board with your budget

One of the top problems couples face is financial issues and agreeing upon money management. You could have the best budget in the world, but if your significant other decides to ignore your budget then a budget won’t work.

Both parties have to be on board and work together to follow the budget carefully. In most couples there’s usually a natural saver and a spender. The natural saver and spender need to sit down and agree upon a budget that works for both of them.

8. You’re too much of a free spirit

There’s nothing wrong with being a free spirit, but it can be more difficult to save money. A free spirit doesn’t care much about budgeting and just wants to have fun!

You need to realize that budgeting should come first. You can have fun only if you have the money saved for your free spirit adventures.  Who doesn’t love to travel or go to a party? Just make sure that you have your other financial goals set aside first.

9. You don’t plan for emergencies

Life’s going well, you might be paying down a lot of debt and thinking you have your money under control. Then something bad happens. Your car breaks down but you already spent your extra money to pay a portion of your student loan debt.

Life constantly throws little emergencies at us every now and then. For this reason, we need to save money specifically for emergencies.

Your emergency fund should contain three to six months of expenses. You should be able to live your same lifestyle if you lost all your income. If you don’t have an emergency fund yet, start saving money and shoot for $1,000 as your first goal.

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10. You bought too much house for your money

House shopping is extremely dangerous if you don’t go into it with a money-game plan. Zillow is a great tool to research the value of homes in your city.

Get an idea of the maximum you’ll want to spend on a house when you start house shopping. Dave Ramsey suggests that your monthly payment be no more than 25-35% of your monthly income. I recommend going as frugal as possible until your house is paid off.

Houses have a way of being just that much nicer for only a little bit more money. You’ll start out looking at houses in your price range and be unimpressed. Since you’re not finding anything, you’ll look at houses just above your price range. Soon you’ll start looking at houses that are twice what your initial max-spending limit was.

We are often too quick to want to live in houses like our parents have. It’s understandable because that’s what we are used too. We don’t realize it took our parents years to reach that level of house. Houses are a big expense and it’s important to take it slow!

11. You’re eating out too much

My big weakness! I love eating out and most people struggle with food-related expenses the most.

It’s easy to eat out because it’s convenient and you don’t have to cook. The problem is that it’s so much more expensive and less healthy to keep eating out. Try to work on the art of frugal eating and start cooking delicious meals at home.

How to fix your budget and save money

My wife and I took a course that really helped us get our finances together. That course was financial peace university by Dave Ramsey. After taking the course we built an awesome budget and got on the same page about our finances. Dave’s course helped us pay off 40% of our mortgage in two years.

To help you fix your budget I’ve created a free budgeting and save money course. The course is designed to help you budget better and maximize your money savings so that you can pay off more debt and live a more financially happy life.