The Trouble With Budgets

Have you tried to budget but have been unsuccessful? There's no one-size-fits-all method of budgeting. The trick is to craft a plan that helps you make sense of your spending and save for the things that are important to you. Here are eight common problems that plague would-be budgeters.

1. You have the wrong impression. Adjust your attitude. Don’t think budgets are straightjackets to keep you from spending – instead they are your key to financial freedom so you have enough money to spend money on things that really matter to you.

2. You've been trying to fit into someone else's shoes. Just as there's more than one shoe size, there's more than one way to budget. If one method doesn't work, try another until you find the right fit.

3. You're making this harder than it needs to be. The key to a successful budget is to keep it simple. Focus on one area where you can cut back. Once you've successfully tackled that issue, you can move on to another.

4. Your budget is too rigid. You need to build in flexibility or your plan will break under pressure. Give yourself some breathing room — to make mistakes, to treat yourself and to make adjustments as your life situation changes or as prices rise.

5. You have no clear priorities. Lacking motivation? Set a goal. Budgeting merely for the sake of budgeting is a chore. But when you have your eye on something you want, managing your spending becomes fun. Think of it this way: A budget helps you manage small expenses today so you can buy bigger stuff — and have more fun — tomorrow. So ask yourself what you hope to gain from your experience.

6. You've set unrealistic targets. Need help getting started? Use 30% of your take-home pay for housing, 10% for utilities, 15% for food, 10% for transportation, 5% for clothing, 10% for debt repayment, 5% for entertainment, and 5% for insurance and miscellaneous expenses. That leaves 10% for savings or special purchases.

7. You don't have a safety net. Priority number one for your budget should be to save up a small cash reserve for emergencies. That way, if the car breaks down or you make an unexpected trip to the ER, you won't undo all your hard work.

8. You quit too soon. Don't be discouraged by failure. It took me six years of trial and error to figure out how to budget successfully.

To read more about budgets, visit Kiplinger.