Creating a well-structured budget is an essential part of managing your money intelligently and getting the most value out of your savings.
Sadly, not all budgets are created equally and sometimes a poorly organised budget can do more harm than good, thus preventing a person from achieving financial success.
Here is a list of signs that the budget you have created is failed and needs to be revised.
You Are Regularly Going Over Your Budget
If you are failing to stick to your spending limits, your budget is more of an aspirational document than an actual budget. 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 that you are exceeding your budget most of the time, it would be a good idea to try and think about why. Have you set unrealistic goals for yourself? Are you spending a little too much or not tracking your spending closely enough?
If it is due to the former, you should consider reworking your budget from the ground up. If it is due to the latter, you should 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.
You Feel Deprived All The Time
A high-quality budget should ideally include at least a little bit of money for the fun purchases that are important to you. If your budget doesn’t, its 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 a chance to enjoy of your hard-earnt cash, consider trying to rework the numbers a little bit so that you give yourself the chance to buy a few treats here and there.
You Face A Lot of Expenses You Haven’t Planned For
If you often find that you are facing unexpected expenses, it is most likely because your budget isn’t comprehensive enough and aren’t considering the routine costs that are likely to arise.
An example of this would be, things such as; 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 you find yourself in this situation, it is advised that you 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.
You’re Disappointed with How Much You Are Saving
The purpose of your budget is to help you accomplishing your financial goals such as saving money for emergencies and to support your future goals.
If you are disappointed with how much money you are managing to put away into your savings account despite your budget, then it is time to revise your current budget and make more critical changes.
You need to decide how much money you want to save ideally around 20 percent of your income and then work the rest of the numbers around accomplishing that goal.
For example, if you earn $2,000 each 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.
Hopefully these changes made to your budget will help provide you more financial security and also give a better opportunity to enjoy your chance, and help you ensure that you accomplish your future money related goals.