Why Budgets Fail

Try as we might, sometimes things fall apart, but why?

Like most basic financial concepts, Budgeting 101 should exist in high school. For the most part, many of us learn what budgeting skills we have (or don’t have) from our parents, who learned from theirs, ad infinitum. Unfortunately, that leaves many people ill-equipped to deal with their finances as they cycle through trial and error to figure it out. So, why do budgets fail?

Lack of Knowledge

Image for the Nav.it podcast episode 38 where Professor Carly Urban breaks down just how few financial literacy courses there are.
Professor Carly Urban breaks down just how few financial literacy courses there are in this podcast episode.

If you knew better, you’d do better. Even today, this quote echoing through the black community simply means that you’d likely make better decisions if you had more knowledge. Instead of direct teaching, budgeting concepts are usually learned by osmosis, like watching how your parents spend money or overhearing conversations. Since many of us don’t experience direct teaching, like parents explaining the value of a dollar or instructing us to save, we have to learn by doing. Now, you might be fine if you have a parental safety net. But if you’re alone in the real world, one false step can bust any budget, especially when you don’t know how to create or maintain one.

Poor Prioritizing

This one might sting a bit, but hear me out. Sometimes, it’s our own fault for breaking our budget because we don’t have our priorities in order. If you have sat down and honestly looked at the numbers, you know what you can and can’t afford. So, you do it to yourself when you spend $100 on dinner without allotting for that ANYWHERE in your budget. To improve, a level of discipline and some hard internal conversations about what you want are necessary.

Image of a piggy bank next to the text 10 ways to avoid overspending. The read now button links to the article 10 Ways to Avoid Overspending.

Poor Partnership Planning

According to my girlfriend, I may or may not be guilty of this one from time to time. If you are in a relationship or share your living space with others, it’s best to be on the same page regarding your financial responsibilities. If it’s your job to handle the utilities and someone else covers the rent, you can’t drop $150 at your local sushi spot before paying the electric bill. On the other hand, having someone blow their money and not cover their end of things may put you in a position where you have to bust your budget to cover them, putting you in a rough financial situation you might not be in otherwise.

Price Increases

Now this one isn’t your fault, but it is no less your problem. As we’ve seen with the shipping crisis and microchip shortages caused by the pandemic, if you’re not paying attention to the broader world around you, supply and demand chains can cause price spikes that affect your everyday life. It will be up to you (or your friendly neighborhood Nav.it blog) to stay on top of rising gas, food, and insurance prices and make the necessary adjustments to your budget. This adjustment can be as simple as switching which brand of lunch meat you buy or as difficult as renegotiating or changing car insurance. Either way, don’t let a false sense of brand loyalty make you spend more money than you need to. If those companies don’t work for your budget, they have to go.

Image of a woman in a gym with gloves on hitting a heavy bag. The overlaid text reads Fighting the impact, inflation. The read now button links to the article Fighting Inflation and the Rising Cost of Living, and What to Do About Everyday Bills like Utilities. The caption at the bottom reads Click this link to read more about the rising cost of living.
Click this link to read more about the rising cost of living.

Having to Deal With the Unexpected

This can destroy a budget before it even gets started. When that car engine blows, your kid needs braces, or that 8-year-old computer is on its last legs, you can’t exactly put it off. In these situations, you find yourself in the “robbing Peter to pay Paul” predicament. You know you have to face this emergency, but the rest of the world doesn’t stop spinning. People will still want their money. You’ll have to decide what gets paid now (food and the power bills are usually high on the list) and what gets put off till later. Why do you think T-mobile receives a fair amount of payments after the due date?

Great, I got it. A lot can go wrong. What do I do about it?

If nothing else, you know we like to be solution-oriented here at Nav.it. Allow me, if you will, to share some of my tips for dealing with these issues.

Educate yourself

There is a STAGGERING amount of financial information out there. And get this; a lot of it is free! Investopedia.com is a personal favorite of mine. If you’re looking for more specific financial information, many of the guests on the Nav.it Podcast share real-world experiences and tips that can get you started on your budgeting and financial path.

If all else fails, check out this downloadable guide to budgeting.

Hundred and fifty dollar bills fanned out over a white sheet of paper that says Budget
Click the link to learn more about why people neglect their budgets.

Truth and discipline

These are the only ways to conquer poor priorities. Using the Nav.it app to face your buying habits and see where your money is going will help you reflect on whether or not that 4th trip to Starbucks this week was worth it. You’ll review transactions and better manage your spending. Set goals, give yourself deadlines, and heck, put up a vision board so you can see your goals and remember why you do what you do. Whether it’s as small as a new pair of sneakers or as big as your first house, it won’t buy itself. Stay focused.

Communication is key

I noted several times in my couples budgeting guide that communication is critical. If you have to sit down with your significant other and tell them to chill out with all the random spending, do that. Speak up if you need help and don’t think you can cover a particular bill. Tell them if your goals change and you want to be more aggressive or relaxed in your pursuit of them. The only way to get on the same page is to tell the other person or people what page you’re on. If your goals don’t align or they don’t have the same discipline as you, maybe you need separate funds or accounts. In extreme cases, perhaps you need to leave them alone.

Do the leg work

Research! Grab store circulars, check out store websites, or even ask friends and family where they shop for the best deals. Do whatever is necessary to ensure you get the best bang for your buck. As I mentioned, brand loyalty should never stand in the way of you and doing what’s best for your wallet. Find alternative shopping options like a mom-and-pop shop with more unique items or make a Costco run with a friend. You may not be able to stop prices from rising, but changing your shopping habits can put more control back in your hands.

Save now, save yourself later

Image of income and expenses in the Nav.it app. Gains include income. Expenses include groceries, healthcare, restaurants, pharmacies, and unsorted.

This one is tricky. The only way to deal with this is to start NOW. Saving now can save you from a budgeting-killing disaster later. (Hello, emergency fund.) This doesn’t require setting aside crazy amounts of money all the time. The main thing is to start. The more you put it off and think you don’t have the money to save, the more it’ll hurt when something unexpected comes up. Oh, and you’ll be caught without a safety net.

Why do budgets fail? For many reasons. Are any of them dealbreakers? Not at all. With knowledge, discipline, and planning, you can mitigate the damage to your wallet and budget. Stick with us, folks. We’ll help you get where you’re going.

Read More:

Downloadable Guide to Budgeting

Managing Money and Financial Stress

How to Budget to Save Money

How to Start an Emergency Fund

10 Ways to Avoid Overspending

How to Stop Impulse Spending and Blowing Your Budget

How Tracking Transactions Can Actually Reduce Stress

7 Bad Money Habits and How to Break Them

How to Save Money By Practicing Mindfulness

How Stores Get You to Spend More and How to Avoid Their Traps

Headshot picture of the writer of this article, Kenneth Medford III, with a muted black and white filter.
Kenneth Medford III

Writer, rhymer, gamer: the easiest way to define the man known as Kenneth Medford. I’m a simple man who loves to learn and loves to help and I wander the digital world trying to find ways to sate my hunger for both. Basically, I’m Galactus but helpful.

Check out my other work here or reach out to me on LinkedIn.

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We’re here to help you break free from the paycheck-to-paycheck cycle and navigate your financial journey, one day at a time. Nav.it At Work gives you the tools to take control of your financial future.


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