Budgets and Money

Fool Proofing Your Budget

Unrealistic plans, inaccurate tracking and not accounting for all expenses can be reasons why your household budget may not be helping you achieve your financial goals.

3 Reasons Why a Household Budget Fails

Nearly one in three Americans use a detailed written or computerized household budget each month to better track their income and expenses1 and how to budget. But making a budget and sticking to it isn’t always easy to do. Regardless of your dedication, working with a household budget can take some time. If your budget doesn’t seem to be working out the way you anticipated, here are some possible reasons why.

You’ve created an unrealistic plan.

If you want your budget to work, you need to be realistic about your spending. For example, if your bank statements indicate that you typically spend $600 a month on groceries for a family of four, then cutting back to $550 a month can be a realistic goal (saving you $50 a month). However, if you set unrealistic goals (let’s say spending only $400 a month on food), you’re just setting yourself up to fail. When learning how to make a budget in the beginning, it’s best to take small steps toward setting spending limits. You can always make adjustments.

You’re not accurately tracking all of your spending.

Creating a written budget means nothing if you ignore the predetermined limits that you’ve set for yourself. After all, isn’t that the very reason why you created a budget? To ensure that you’re staying on track, consider taking the time at the end of each week to add up your purchases or totals in each category. So for example, if you find that you’ve exhausted more than half of your grocery budget and the month is only half over, then you need to make some adjustments. This means getting creative with some of the best ways to save money and by stretching your food budget so that it lasts the entire month.

You’re not including all of your expenses.

If you’re not including all of your monthly expenses, your written budget isn’t going to work as anticipated. You must be able to plan for almost any expense that will come up during any given month. For example, you may have budgeted for gasoline expenses each month, but what about oil changes? And don’t forget about services such as haircuts for the family and medical copays for office visits and prescriptions. Be sure to factor in irregular payments that may include quarterly insurance or tax payments, or annual birthday gift expenditures. To create an all-inclusive budget, get out your calendar and brainstorm any expenses that are expected to arrive in the next 30 days.

A written budget serves as a plan for the money you work so hard to earn. If budgeting hasn’t worked in the past, it might be time to give it another try. You have nothing to lose and a lot to gain!

1. Gallup's annual Economy and Personal Finance survey, conducted April 4-14, 2013

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In this article Protective Life gives three reasons why budgets fail. Making a budget allows you to be more comfortable with your finances. However, it's important to be realistic in your budget creation. Don't expect to get your budget right on the first try. It takes some time to recognize the areas in your budget that need a little more attention than others. Writing out a budget can give you a visual way to better track your expenses. Don't be afraid to try different methods to reach success. For more information, visit our learning center.


All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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