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13 Reasons Your Budget Isn't Working

Updated: Aug 1, 2019

Also known as....Excuses!

1. You aren’t doing one.

In your head doesn’t count. It has to be written down (pencil and paper, or a computer program or spreadsheet, or in a phone app like Every Dollar). I’ve heard way too many people SAY they do a budget but are completely unable to show it to me, which means it doesn’t actually exist, except in their imagination.

2. Your budget isn’t zero-based.

Budget every dollar of your income for the upcoming month, but not a penny more. Write your total take-home pay for the month, from all sources, at the top of the page, then “spend” every dollar down the page in all the various categories of life, until there is ZERO left. That’s a zero-based budget.

3. You leave things out of your budget.

You don’t think ahead well enough to what is going to be happening in your life in the upcoming month. Get your calendar out (you do keep one, right?) and think about the money implications of everything in your calendar. Everything in life has a dollar sign attached to it.

4. You use too few categories.

If you use enough categories, then each month when you are thinking about what you will need, the categories themselves will serve as a reminder. You need enough detail in them to do that.

5. You lump too many things under Miscellaneous.

This is a result of the laziness of not having enough categories. Huge amounts of money budgeted as miscellaneous indicates lack of attention to your important goals with money, or an attempt to ignore bad money decisions that you don’t want to admit. If you are putting the same item under miscellaneous more than twice in a year, then you need to make a category for it.

6. You don’t record your expenses.

Your budget is worthless and a waste of your time if you don’t actually live by it, and that means recording what you actually spend in the categories where you budgeted them.

7. You lose receipts and lose track of some expenses.

Get in the habit of getting a receipt for EVERY purchase, and keep them all in the same place while you’re out (one particular slot of your wallet), and all in the same place at home until you record them in your budget.

8. You don’t record ALL of your expenses.

Probably because you forgot to get a receipt, so you then forget you bought something. Also don’t forget to record online purchases, and bills paid online, before you get up from your computer.

9. You wait too long to record your expenses.

So by the time you record them all, you find out you’ve already overspent in many categories. If you just get in the habit of doing it either daily or every couple of days, the amount of time it takes is minimal. Waiting till you have a big pile of receipts turns it into a major chore, and defeats the purpose.

10. You record your expenses but don’t compare them to your budget.

That’s kind of the whole point of the exercise! It’s to make sure that your actual expenses don’t exceed the amount you have planned. If you never compare them, what’s the use?

11. You record your expenses but don’t compare them to your budget until the end of the month.

If you wait until the month is over, it’s too late to make the changes needed to keep from overspending in any particular categories, or overall for the month. It’s really no better than not comparing at all.

12. You don’t change your budget when you need to.

When you first start learning how to budget, you will need to change the budget numerous times the first month, about half as much the second month, and half again as much the third month. After that point, you will be good enough at it that the number of changes will stay about the same each month. You’ll never have a month with no changes. Life happens, and we can’t predict everything, so you’ll need to adjust the budget accordingly. Just make sure it remains a zero-based budget after the changes.

13. You cheat on your envelopes.

Many people find great success using the envelope system. You simply put the budgeted amount of cash into an envelope that you carry with you. For example, groceries. All groceries are purchased using the cash in that envelope, and nothing BUT groceries is ever purchased with that cash. The trouble is that if you carry multiple envelopes for different categories, say groceries, eating out, clothing, and entertainment, it can be very tempting to rob from one envelope to supplement a different one. Then you run into a bind for the category you robbed from. Envelopes work but they require absolute honesty.


Learning how to budget effectively is THE most important money skill you will ever develop. It’s the basis for making all of your other financial decisions, both short term and long term. Like any good habit, it takes time to learn. If you need more help, I am a budgeting nerd extraordinaire, and helping people learn this skill quickly is my specialty. So SCHEDULE A FREE CONSULTATION with me if you’re stuck.

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