If You Don’t Track When You Budget, Don’t Budget

Quite a while back, my sister asked me to create a budget for her as she had a goal of saving a certain amount of money per month.

Okay, I said. She could easily use my category breakdowns with some small adjustments since we were both single and living at home. I then asked her to tell me how much she was spending at that time in each category.

The fixed costs were easy, but the variable stuff like money spent eating out, shopping etc, she had no idea. She asked me to just put in any figure as long as the budget ended up having her saving X amount a month.

No way! I told her all we are going to end up with was a budget she would not be able to follow, if we did it that way. She would probably end up feeling like a failure and throw out the budget after a couple of months and claim that budgets don’t work. Or claim that I suck at the budgeting process. I wasn’t going to be maligned like that.

If she wanted me to create a budget for her, she could jolly well track her expenses and get back to me in a couple of months.

And this is my number one pet peeve from a lot of people who complain about budgets not working for them. They don’t take the trouble to put in the proper figures. If you have been spending $1,000 a month on groceries which you have been unaware of, and then you stick a $200 figure into the budget just for the sake of making it work on paper, it is never going to work. Because you don’t even know you have a $1000 per month spending problem in the first place, and have taken no steps in correcting that.

And then people blame their budgets for not working out, when actually it is more a rubbish in = rubbish out situation.

I also told my sister then that once the budget was completed, she had to at least track her expenses for at least three months, or use the envelop/jar methods. She balked, but could not answer my question, “How else would you know if you have been adhering to the budget and if any part of your spending needs work?”

I see the exact problem on some PF forums/blogs, where some people post their budgets and comment “My budget says that I should have an extra $300 a month to throw at debt, but I never get to that stage. The $300 just disappears at the end of the month.” But when asked where the money had gone or whether they overshot some of their categories, they have no idea. And then they complain that budgets don’t work.

Anyway, it has been years and I haven’t heard back from my sister. She still doesn’t budget. She solved the problem in the end by making way more than she could ever spend, so it all worked out.

If one doesn’t want to use budgeting as their financial tool, that’s fine. There are many ways around the problem of getting ahead in PF, and my sister has obviously found that making lots and lots of money so she doesn’t have to worry about her spending, works for her.

But if one chooses budgeting as a tool, one needs to recognise that budgeting and expenditure tracking goes together. Otherwise, the budget is only for show. In which case, please don’t blame the tool for things not working out. Blame the user.

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This entry was posted in Budget.

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