4 Signs Your Budget Has Gone Bad

by Christy Bieber | Published on Oct. 4, 2021

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A couple go over their personal finances in their kitchen.

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You don't want to keep trying to stick to a budget that isn't working.

Creating a budget is a key part of managing money wisely and getting the most value out of your dollars. Unfortunately, not every budget actually helps people achieve their financial goals.

Here are four big signs that the budget you've created has gone bad and that it's time to make some revisions to your spending plan.

1. You are regularly going over budget

If you aren't sticking to your spending limits, your budget is more of a wish list or an aspirational document. It's not necessarily helping as much as it could to ensure you're using your money as wisely as possible to accomplish any goals.

If you find yourself exceeding your budget all the time, the best thing to do is to figure out why. Have you set unrealistic goals for yourself? Are you spending a little too much or not tracking your spending closely enough?

If it's the former, consider reworking the budget from the ground up. If it's the latter, you may want to consider an approach such as envelope-based budgeting where you put a certain amount of cash for each spending category in an envelope and stop spending as soon as it's gone. For more help, check out our complete guide to budgeting methods.

2. You feel deprived all the time

A good budget should ideally include at least a little bit of money for the fun purchases that are important to you. If it doesn't, it's understandably less likely that you'll stick to it over the long-term, and you could be more prone to splurges that leave you in credit card debt.

If your budget makes you feel like you never get to enjoy any of your cash, consider trying to rework the numbers a little bit so that you give yourself the leeway to buy a few treats here and there.

3. You face a lot of expenses you haven't planned for

If you regularly find yourself facing surprise expenses, then chances are good that your budget isn't comprehensive enough and isn't taking into account the routine costs that are likely to arise.

For example, things like holiday gifts and home repairs shouldn't be surprises because you know they're going to come up eventually. So you should be planning and saving for them over time.

If this is your situation, go through your credit card statements for the last six months or last year and make a list of any periodic expenses. Then figure out how much you need to save each month for them so you can be prepared and they won't become budget-busters.

4. You're disappointed with how much you're saving

Your budget should help you accomplish goals, including saving money for emergencies and the future.

If you're disappointed with how much you're putting aside for your goals despite your budget, then it's time to go back to the drawing board. Decide how much you want to save (ideally around 20% of your income) and then work the rest of the numbers around accomplishing that goal.

For example, if you bring home $2,000 per month and you want to save $200, include $200 as a must-pay bill along with your rent or mortgage and other essentials. After factoring in your savings and those other crucial bills, divide the amount left over up into different kinds of discretionary spending that you want to do.

These budget fixes should hopefully help you create a good budget that you're able to live with, that provide you with the chance to enjoy your money, and that help you ensure you're able to accomplish your goals in the future.

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