Why Your Budget Might Not Be Working

Saving money is not always as easy as it seems. Sometimes, it just isn’t in the budget. I have heard so many people say, “I just can’t hold onto my money. Savings isn’t in the budget. I make money and it all goes out the door.” Generally, there are three classes of people here, though:

  1. They have money, they just have the wrong budget.
  2. They do not have a budget at all.
  3. They are truly just getting by.

Saving is not an easy thing to do – you have to want to do it. In all three of these situations, I can you how to get there or at least get on the right track.

For Those Who Have a Budget

Study your budget and find out where the holes are. If you set this up to save some money, but it isn’t working correctly, you have to find the problem. Many people set up their optimum budget, but they are just not following through. It all depends on the type you set – is it detailed or generic? I always opt for a detailed budget, as it really helps you see where your money is going. The general rule of thumb is 50% needs, 30% wants, and 20% savings and debt.


What are needs? Needs are the things you cannot live without. So, you need a roof over your head, and you need food on the table. You also need to keep your lights on and to heat your house. You need insurance to protect yourself and you need to get from place to place, so fueling your vehicle counts, too.

What are wants? A want is not a necessity, but you still need them to enjoy life. This is also where your car payment would go. This is where you put going out to eat, a trip to the movies, or those nice new clothes you bought online. It is funny that people say, “I need a card, it should be in the needs.” Yes, you need a car, but not a brand-new Mercedes that leaves you with hefty payments each month. There is a difference between a need and a want. And if you need a car payment, then it was not a need but rather a want.


What about savings and debt? In this category, you would include saving for your emergency fund. It can also include things like paying off student loans, mortgages, and credit cards. Lastly, this is where your retirement goes.

A lot of times, a person’s wants spill over into the savings and debt portion of the pie. You need to go into your budget and take a hard look at it and ask yourself if you really need some of the things that you are spending all of your hard-earned money on. That way you can start saving to make your dreams a reality.

Those Who Do Not Have a Budget at All

The easiest way to start a budget is to take a look at what you spent last month and build a budget around that. Though you and I both know that expenses change from month to month, there are some things we can plan for. For those of us living in the Northeast, it snows in the winter. So, we have to prepare for the higher heating bills and potential snow removal, if needed. Let’s not forget about the holidays, as they can take a nice bite out of your budget. Just make sure that you’re being honest with yourself and writing down what you actually spend, because a budget is only as good as the information that’s put into it. If you would like an idea of what to take into account when planning a budget, check out this article here.


Those Who Are Just Getting By

If you are living paycheck to paycheck, I feel for you. I was there once, too, and I know many people still in that situation. I know it’s not easy. One thing you can try is to track your budget versus your actual expenses and see what’s going wrong. This happens a lot sometimes. We have a number in our head for the budget, and while it sounds great, we end up checking it versus the actual number and it’s pretty off. Make sure the numbers make sense and see if you can tweak them to make it work in your favor, so you can start saving some cash or paying off some debt.


Sometimes, the budget isn’t the issue and you could actually have an income issue. If your needs are more than 60% of your income, then you need to make some more money. Luckily, we live in a digital era where you can download and app and become a delivery driver, or you can buy and sell items online for a profit. There are endless ways to make extra money, but it is obviously going to cost you some time and effort. Just remember this: it will help you save in the long run and hopefully help you get out of the rate race and into your dream life!

Bottom Line

Saving money isn’t easy. It comes with practice and the effort of doing. You need to be vigilant with your savings and make sure that you are putting money away when you can so you can lead a successful life. The best place to start is with a budget in order to figure out where your problem lies. You can always go to the source and the source for personal finance starts with a person’s budget. Once you find out where the money is going, you can make the right corrections you need to in order to be a successful saver. If you take some time to do this, I promise you will get back what you put in tenfold!


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