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A budget is a great way to monitor your financial health, but living on a budget can be difficult. Going over your allocated spending month after month can cause frustration and stress.
The good news? You’re not alone. We asked nine certified financial planners how many of their clients stick to a budget, and many of them don’t.
Q: How many of your clients actually stick to a budget?
“Budgeting is very tough even for those who try really hard. Most get the day-to-day expenses down but miss the one-offs, which can amount to a significant number. Even an accountant client of mine estimated his family's budget at half of what it actually turned out to be! Most clients are much better on a savings budget, thinking about how much they need to save to support a certain level of spending in the future. Then, they can spend the rest without worry or constant tracking. Much easier for the client and, in the end, more effective for the overall plan.” — Matthew Fatz, certified financial planner at Thrive Wealth Management
“You don’t necessarily need to stick to a strict budget, but it’s important to understand your monthly income versus non-discretionary expenses (house payments, debt, groceries, etc.) and discretionary expenses (entertainment, vacations, etc.) to create a savings plan and have long-term financial stability.” — Haley Tolistsky, certified financial planner at Cooke Capital
“The key is not as much sticking to a budget as it is about actually creating an annual budget, and then reviewing the actual versus budgeted figures on a monthly basis. I think that’s what makes budgeting work really well. This applies to both families and business owners. Taking these steps enables people to determine if spending exceeds income; if there are enough funds for savings, taxes, and/or business investment; and if the budget is accurate enough that it is possible to be able to stick to it. It also helps people see where changes are needed.” — Sallie Thompson, certified financial planner
If you’re struggling to follow a budget, here are some simple ways to stay out of the red each month:
Put saving first. It’s tempting to put spending before saving. But it should always come first. Automate regular contributions to your savings account so you don’t forget (we have 25 additional tips on how to save here).
Focus on your pitfalls. It’s likely that only one or two budget categories are the major offenders, like takeout or an online shopping habit. Focus on reducing spending in those categories instead of overhauling your entire budget.
Keep it simple. Try the popular 50/30/20 budget, which has you organize your budget into three simple buckets: needs, wants and savings.
Put your card on ice. Leave your credit card at home or have it available for emergencies only, which will curb impulsive spending.
Ready to get started? Download our free budgeting spreadsheet here.
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