Budget Failure? 30 Nov 2009 by Johan Kriegbaum in Getting Ahead Blog

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Why do people fail in budgeting? Over cold bottles of beer my friends...

We all do it, go around complaining about having to stretch our paychecks to the limit. A few times the situation gets even worse and we barely make it to the next payday. And, the culprit we've more or less concluded, is not sticking to our budgets. To be more specific, failing to follow our personal budget to the decimal! It's a huge reality check for most us, and to me personally.

So, I did a bit of soul-searching, and came up with a good reason why I don't follow the budget I've made for myself. One hard truth: lack of common sense and discipline. Well, it's like this, when friends get together and good times start rolling, the cash comes out of the pocket too easily. Do you know what I mean?

Of course, it doesn't always happen, but it does happen sometimes, right? We love spending a good night out with friends and family, eating at nice restaurants, seeing some good live music and stuff like that. It's all great, if you've got money set aside in your budget for good times. Or, if you've saved on something else, say you toned down your electricity bill. You've got extra cash, so you spend it on a night out or road trip or a big screen TV, whatever your heart's desire. We can buy whatever we want, travel, and have the time of our lives. However, if our budget doesn't permit it, it's better to sacrifice, save, and wait for the right time.

Remember the hangover is ten times worse if you can't cook a massive breakfast the day after because the electricity has been cut off.

It's good to analyze your financial situation once in a while before all hell breaks loose and you are buried up to your neck in unpaid bills. Here are some questions you can ask yourself to get the fun/survival balance right.

What do I need to survive?

• Rent
• Electricity
• Food
• etc.

Once you've figured this out and cut it down to a minimum, put this money into a separate account when you get your paycheck.

Next step...

What makes my life fun and interesting?

• Going out with friends
• Surfing
• Travelling
• Etc.

What you have left after covering your survival costs will go to cover the fun part. Divide this money into two, one for daily fun and one for larger things like travelling. It's up to you if you want to make it 50/50 or however you want to split it up.

I know these questions can be really hard to answer honestly. But assessing your financial situation now is the best thing you can do for yourself.