Why Budgets Fail

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

by Kenneth Medford III

Like most basic financial concepts, Budgeting 101 is a thing that should exist in high school that doesn’t. For the most part, many of us learn what budgeting skills we have (or don’t have) from our parents and they learned from theirs, ad infinitum. Unfortunately, that leaves a lot of 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

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. This quote heard even today echoing through the black community, simply means if you had more knowledge, you’d likely make better decisions. Because the concepts of budgeting are usually learned by osmosis (watching how your parents spend money, overhearing conversations, etc) and not from direct teaching (your parents explaining the value of a dollar, directly teaching you to save, etc), many of us have to learn by doing. Now, if you have a parental safety net, that might be fine, but if you’re out in the real world alone, 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 simply because we don’t have our priorities in order. If you have sat down and truly looked at the numbers, you know what you can and can’t afford. So, when you go out and spend $100 on dinner when you didn’t allot for that ANYWHERE in your budget, you did it to yourself. In order to improve, a level of discipline is necessary and some hard internal conversations about what you really want.

Poor Partnership Planning

I. . .am guilty of this one from time to time (according to my girlfriend). If you are in a relationship or share your living space with others, it is best to be on the same page as far as what your financial responsibilities are. 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 the electric bill is taken care of. On the other side, 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 wider world around you, supply and demand chains can cause prices spikes that affect your everyday life. It will be up to you (or your friendly neighborhood Nav.it site) to stay on top of rising gas, food, insurance, etc prices then make the necessary adjustments to your budget. This adjustment can be as simple as switching which brand of lunch meat you buy or be as difficult as renegotiating/switching 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 gotta go.

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 isn’t going to stop spinning and people will still want their money. You’ll have to make the hard decision about what gets paid now (food and the power bill are usually high on the list) and what gets put off till later (the reason T-mobile gets 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 give you some of my tips for dealing with our aforementioned 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, but 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.

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 really face your buying habits and see where your money is going will help you seriously face whether or not that 4th trip to Starbucks this week was really worth it. Set goals, give yourself deadlines, heck put up a vision board so you can see what your goals are 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’s not going to buy itself. Stay focused.

Communication is key

As I noted several times in my couples budgeting guide, communication is key. 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 you don’t think you can cover a particular bill. If your goals change and you want to be more aggressive/relaxed in your pursuit of them, tell them. The only way to get on the same page is to tell the other person/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/accounts. In extreme cases, maybe you just 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 you have to to make sure you’re getting the best bang for your buck. Like I mentioned before, brand loyalty should never stand in the way of you and doing what’s best for your wallet. Find alternative shopping options (maybe a mom and pop shop that has 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

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 just start. The more you put it off thinking you don’t have the money to save, the more it’ll hurt when something unexpected comes up and you don’t have a safety net.

Why do budgets fail? For a number of reasons. Are any of them deal breakers? Not at all. With knowledge, discipline, and planning, you can mitigate the damage to your wallet and your 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

DOWNLOAD THE NAV.IT APP TODAY!


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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