There is a secret to building budgets that works. It’s a simple secret that many people don’t realize is important until they have created yet another budget and fail at staying with it. The constant failure at budgeting is one of the biggest reasons that people don’t like the idea of budgeting or trying to tame their finances with a budget. Once they learn one secret, they are often surprised and ready to try again.
Budgets are normally used by people that want to accomplish a specific goal. Some people have a goal of paying off debt faster than they normally would. Others want to become debt free or save money for a trip. No matter the reason, one of the most used tools to accomplish those goals is budgeting. As people find the secret to budgets that work they find their goals easier to accomplish.
Why Budgets Fail
No matter how hard people work at staying on their budget, most seem to fail. They have studied their spending habits and taken everything they could into account before building their budget. They don’t expect to fail after so much preparation. When an unexpected expense has to be addressed most budgets begin to fail.
It’s easy to build a budget based on constant bills. These bills occur regularly and the amounts don’t change often. Many of these bills include rent, utilities and car payments. These are the bills that are easy to account for because those amounts don’t change and they have to be paid. What isn’t easy to plan for are the unexpected expenses that happen every so often. Not having money set aside for the unexpected is the biggest reason good budgets fail to work.
The Obvious Secret to Successful Budgets
There is a secret that make building budgets that work easy to do. It’s a free secret that many people don’t think of when building a budget.
To create budgets that work people have to plan for the unexpected expenses in life. It sounds silly to say but it’s true and entirely possible. In order for a budget to work, there has to be money available to address any unexpected expenses that happen. After all, it’s the unexpected expenses that sink a budget.
In order to plan for the unexpected, one must look at history. People that are planning budgets should take the time to look at a year’s worth of checkbook registers, bank and credit card statements and receipts to get an understanding of their history. They need to look for expenses that happened that put them in a financial bind and document it. By looking at this information, it’s safe to estimate how much money is needed to build a cushion for these unexpected expenses. If the total for home repairs was $3,000 then at least $3,500 should be saved over the course of a year for that unexpected cushion. It’s always good to add more to the emergency fund just in case.
Planning for the unexpected is the secret that people need to know about to get create budgets that work.