Why Most Budgets Fail
It doesn’t necessarily take an illness or an unexpected accident to realize how valuable budgeting is. The reason I say this is that I just gave birth 2 months ago and I went through an extremely stressful period financially due to our limited budget and lack of planning. Dear followers, I will share with you step-by-step my financial and budgeting experiences that I have gained over the years so that you do not face such problems.
It is not just about making a budget plan. You need a system that works for the whole family. I share how I set up this system and what difficulties I encountered with all the details below.
Step 1: Know Your Why
Be transparent and honestly ask yourself this question before you take any action: Why do I want to budget?
Your why could be:
- To get rid of living paycheck to paycheck
- To get out of debt
- To save for a vacation or a house
- To feel less stressed about money
Knowing your “why” gives your budget a purpose, which makes it easier to stick to, especially when things get tough.
Step 2: Track Your Current Spending
I am not asking you to do anything difficult. Just track all your expenses closely for 1 month. This way you will see where your money is going and after 1 month you will say how much unnecessary spending I was doing. Now you will see how much these unnecessary expenses have decreased.
Categorize your expenses as follows:
- Rent/mortgage
- Utilities
- Grocery shopping
- Transportation
- Subscriptions
- Eating out
- Entertainment
- Debt payments
- Savings
Daily, habitual expenses (tea, coffee or Amazon orders) you will be surprised how much you spend on such habits.
Step 3: Calculate Your Total Income
Next, write down your monthly income. This includes:
- Salary (after taxes)
- Income from a freelance or side hustle
- Child support or government benefits
- Other recurring income
- Make sure to use net income (your actual net salary) and not gross.
If your income fluctuates, use an average of the last 3 months or base your budget on the lowest month to be on the safe side.
Step 4: Choose a Budgeting Method That Works for You
Don’t stick to just one method for budgeting. There are many budgeting methods available today, and I’m sharing the three most popular ones below.
🟩 1. The 50/30/20 Rule
- 50% for needs (rent, food, bills)
- 30% for wants (entertainment, food)
- 20% for savings or debt payments
- Best for: Simplicity and balance.
🟨 2. Zero-Based Budgeting
Every dollar goes to work. Income – Expenses = $0.
You assign each dollar to a category: bills, food, savings, etc.
Best for: People who want full control and accountability.
🟦 3. Cash Envelope System
You withdraw cash for each category and spend only what’s in the envelope.
Best for: Overspenders or visual learners.
Step 5: Set Realistic Spending Limits
Now we can adjust your categories. Because; You’ve become a conscious individual and you know where your money goes.
Here’s how:
- Highlight the non-negotiables (rent, utilities, minimum debt payments).
- Identify the negotiables (eating out, shopping, subscriptions).
- Cut the restrictions as much as possible, but don’t cut too deep; your budget needs room to breathe.
- Use the 80/20 mindset: small changes to 20% of your habits can improve 80% of your financial results.
Step 6: Automate What’s Possible
Budgeting can sometimes be a time-saver. That’s why you shouldn’t spend time micromanaging every dollar. Instead, create automated systems.
- Direct deposits to savings
- Automatic bill payments
- Debt snowball payments
- Recurring investments (like ETFs)
Automation eliminates friction and reduces the likelihood of “forgetting” to save.
Step 7: Monthly Review and Adjust
Let’s be transparent and realistic, no budget will be perfect from beginning to end. Every month is a new learning experience.
At the end of each month:
- Review how much you overspent or underspent
- Reassign categories if necessary
- Celebrate wins (even small ones)
- Don’t beat yourself up for mistakes
Pro tip: Budgeting is a skill, not a talent. You’ll get better with practice.
Common Budgeting Mistakes to Avoid
Dear follower, don’t get discouraged, we are always here for you. Avoid these traps that lead you to disappointment:
- Being too strict — If you cut too much, you’ll burn out
- Ignoring irregular spending — Birthdays, car repairs, etc. planning for
- Not including your spouse — Money talk is relationship talk
- Skipping the fun altogether — Your budget should include joy, not just survival
Example: A Simple Startup Budget (Monthly Income: $3,000)
| Category | Amount |
| Rent | $1,000 |
| Utilities | $200 |
| Grocery | $350 |
| Transportation | $150 |
| Debt Payments | $300 |
| Savings | $300 |
| Entertainment | $200 |
| Eating Out | $150 |
| Miscellaneous | $150 |
| Total | $2,800 |
Remaining: $200 → Emergency fund or extra debt payment
Bonus: I’m working like crazy to teach you how to budget here. I share the best budgeting tools for you that are free.
- EveryDollar (easy, clean interface)
- Mint (popular, connects to your bank)
- Goodbudget (based on the envelope method)
- Google Sheets Budget Template (simple and customizable)
Final Thoughts: Your Budget is Your Freedom
Some people think of budgeting as a form of poverty. It’s not about poverty; when you tell your money where to go, you stop wondering.
Don’t focus on making a fortune right away. That’s the wrong way to go. Start small, and with time and consistency, your budget will snowball and you’ll feel freer than ever.
