8 Reasons So Many People Fail at Budgeting

With an economy still reeling from the impact of a pandemic and record inflation causing skyrocketing prices on things Americans buy and use every day, many people find themselves asking, ‘Why can’t I stick to a budget?’ Add in an impending recession, and budgets in 2023 seem to be in for a severe shake-up. Now is the time to start planning how you’ll make your 2023 budget work for you and set yourself up for financial success.

Why is sticking to a budget so hard?

In our consumer-driven society, the concept of “less is more” has gone by the wayside. We’re wired to spend, not to save. People don’t like being restricted or told they can’t have something that they want. In fact, this is part of the psychology behind impulse spending — just one small part of overall budget failure — that drives the decision to spend without thinking it through.

If you find that you’re unable to keep up with your current budget, there are a few reasons to consider as to why. With these ideas in mind, you can troubleshoot your budget to help you get things back on track.

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1. Inflation caught you by surprise.

As prices rise and things we use everyday cost more and more, our budgets have to shift in order to maintain the status quo. For example, when a weekly grocery budget of $250 no longer fills the fridge, you either have to increase the amount allotted for the task or re-consider the items you buy.

Rising interest rates also contribute to overall financial stress when budgeting. Rearranging your budget when you take out a new loan is a must to keep you on track, but as interest rates continue to climb, your 2023 budget may take a hit.

Examining your budget to find where the extra cash can come from will mean cutting spending in other places. When faced with forgoing purchases you want to make — like a tech upgrade, new wardrobe, or overdue home updates — or decreasing the amount you’re contributing to pay off debts or put toward savings, the decision can be stressful. This stress might even cause you to toss your entire budgeting plan right out the window.

2. Your budget expectations are unrealistic.

If you’re not bringing in enough money to cover the lifestyle you lead, it can throw your budget completely out of whack. If your income is too low to support your overall expenses, the solution is to either reduce your expenses or increase your income. Set a budget that allows you to live within your means to help ensure you can stick to it.

3. You don’t have a handle on what you’re actually spending.

Until you know what funds are going out versus what is coming in, budgeting just won’t work. Examine your fixed expenses like your mortgage, contributions to savings and debt-payoff, and spending on essentials like food and transportation against discretionary spending like your vacation fund and money spent on eating out. Variable expenses that change from month to month like your water and electric bill can also cause your budget to fluctuate, so these spending changes should be examined and accounted for when planning your budget.

4. Your income is inconsistent.

Inconsistent income makes budgeting innately harder. For folks in the service industry, hourly workers, or those who rely on contract and freelance jobs, a cycle of inconsistent income can make budgeting feel near-impossible. This is especially true post-pandemic as economic uncertainty has hit hard and people are being more cautious about discretionary spending. Times of income volatility like an unexpected illness that leads to time off of work, a maternity leave, or even a pandemic-related shutdown can also have a huge impact on your budget.

When income is inconsistent, planning ahead is the most important part of budgeting. The money you set aside when income is steady can help tide you over and help your budget stay intact when wages are lower.

5. You’re resistant to change.

If you aren’t reviewing your budget to make necessary adjustments in line with rising prices or goods and services or lifestyle changes like a job loss or promotion, you’re missing an opportunity to create a budget that you can actually stick to. Experts like Grant Sabatier of Millennial Money recommend starting with a weekly budget plan and review system. As you get more disciplined, you might move to a monthly review of your finances or choose to do a big yearly overview for larger adjustments. The important thing is to make budget review and analysis part of a regular routine so that what you spend (plus what you save and invest) is actually manageable.

6. You didn’t plan for the unexpected.

Emergencies happen. Layoffs happen. Holiday spending gets out of control every once in a while. Weddings pop up that blow your budget out of the water. If you neglect to include occasional irregular spending in your budget, you’re bound to fail. Though it’s impossible to account for exactly how much these unexpected expenses will cost you, it’s still a good idea to set aside at least some cash every month in a rainy day fund as your budget allows.

7. You and your partner aren’t on the same page.

Shared finances mean a shared budget, so when you and your spouse or partner don’t see eye to eye, it can really impact your cash flow and make sticking to a budget incredibly difficult. Talking through your budget expectations is a great first step, but it can be daunting. In fact, a recent survey revealed that one in five couples say that money is the biggest challenge in their relationship. In the end though, you’ll need to make sure you both abide by the budget you set in order to prevent financial failure.

8. Your budgeting method isn’t the right fit. (Or you don’t have one at all.)

The biggest mistake of all is having no plan for your finances whatsoever — to stick to a budget, you first have to make one. Just like every person is different, every person’s finances are different. What works for someone else’s budget, may not work for yours.

If a simple and straightforward budgeting strategy like cash stuffing works well for you, stick with it until it no longer serves you. If you’re more in tune to technology and want to work to pay down debt, perhaps a budgeting app would be more suitable for your needs.

Bottom line

The main takeaway here is to find out what type of budget works for you and adjust it as needed so that you’re able to stick to it. Despite any frustrations you feel, uncertainty about your approach, or the ups and downs of the economy, the success of keeping your budget in order and staying in great financial shape will be worth it.