5 reasons your budget isn’t working

Do you find yourself ignoring that budget you worked so hard to create? You’re not alone. In fact, five common hurdles throw many people off course.

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1.     Analysis paralysis

You feel that you can’t create a budget until your system is perfect.

Why it happens: If you’re a perfectionist, you might be afraid of making the wrong choice—so you make no choice at all.

The solution: Just start somewhere, maybe by tracking just one or two important categories. Remind yourself that even an imperfect budget is better than no budget.

2.     It’s too complicated

Last month, you resolved to keep track of every cent. You kept it up—for two days. Now you feel defeated.

Why it happens: People assume budgeting has to be a lot of work, when really it’s about finding simple and realistic solutions and habits, says Judy Lawrence, money coach and author of The Budget Kit.

The solution: Keep it simple and give it time. Whether you use a notebook or an app, tracking expenses should take no more than 5–10 minutes a day once you get the hang of it—but all new habits take time.

3.     Life changed

You didn’t include that tax bill. Or a buffer for emergencies such as car repairs or ER visits.

Why it happens: People tend to focus on what’s right in front of them.

The solution: Brainstorm annual expenses, potential one-time events and even occasional seasonal spending like gift buying, and add a bucket for those.

4.     The “buy” button

Love daily deals and downloads? Buying a $2.99 app or streaming a movie for $4.99 doesn’t seem like much, but those small purchases can add up.

Why it happens: If you’ve registered your credit card information with an app or a site, the ease of buying can make you forget those transactions.

The solution: Before you click “Buy,” take a five-minute pause to consider whether you really need the purchase. If you use a budget app or spreadsheet, track your online spending—you may be surprised when you see the total.

5.     You’re a giver

You’re good at sticking to a budget for yourself, but when it comes to your friends, your partner or your kids, you like to be generous.

Why it happens: “Many people find it’s easier to justify spending on other people than on themselves,” says Lawrence. When it comes to gifts, “the budget rules go out the window.”

The solution: Build gifts and treats into your budget. Just because they’re not for you doesn’t mean they don’t count as expenses.

Ready for the next step?

Want more information about building a budget and curbing overspending? Check out our tips on money management and find a budget approach that works for you.

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The material provided on this website is for informational use only and is not intended for financial, tax or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional and tax advisor when making decisions regarding your financial situation.

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