3 Reasons Traditional Budgets Don’t Work + What to do Instead

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Why traditional budgets don’t work + what to do instead

Have you heard the statistic before that “80% of people don’t budget”?

Yup.

4 out of 5 people do not have a budget for their money.

Yet if you were to go to Google right now and type in “budgeting template”, you will see 499,000,000 results – each one showing you a solution for creating your monthly budget.

499 million! Try it – go to google and type in “budgeting template”. The results will be in the hundreds of millions.

There are 499 million options available for people to better manage their money and yet the large majority of people (4 out of 5), don’t use any of them.

If you were to click on any of those 499 million “solutions”, what you’ll find is a typical “monthly budget.” You know the one – you’ve downloaded an excel version of it a time or two or perhaps you’ve downloaded a budgeting app like Mint or Everydollar. They’re all the same.

You list all your income for the month at the top. Then you list all your expenses for the month. And at the bottom it gives you this magical number “You should have $X left at the end of the month! Yay!”

You’ve tried this method and gone into the month with hope and optimism.

This is the month you’re going to get ahead.
This is the month you’re going to get a handle on your spending.
This is the month you’re going to really see where your money is going. 

Only… the end of the month comes and you don’t have any extra. And you’re not sure why.

There were those extra school clothes and supplies you needed this month.
There was that car repair – luckily the bill wasn’t even higher (whew!).
You had to get plane tickets for your best friend’s wedding.
And, maybe you spent a teensy bit more eating out this month than is the norm, but you were just so busy! 

You tell yourself you’ll get ahead next month.

Next month will be better.

You feel like you should be doing better and it’s frustrating and exhausting that you’re not.

Here’s the thing – you absolutely can be doing better, but not with this traditional approach to budgeting that exists.

When I see 499 million solutions right at our fingertips yet 80% of people aren’t using them, that doesn’t tell me people are bad with money. It tells me those 499 million results do not work.

The traditional, monthly budget, has some pretty major flaws.

FLAW: Not representative of how you spend your money

The biggest flaw is that it does not represent the way most of us live our lives and spend our money. For example, if I have $1,000 to spend on groceries for the month, I don’t do all of my shopping in one trip and spend exactly $1,000 (I wish!).

If you’re like me, you’re monthly grocery shopping probably looks a little more like this:

  • You have miscellaneous things shipped from Amazon
  • You go to Costco a couple times each month
  • You hit your neighborhood grocery store at least once a week to buy more produce or the other random things that you need to make dinner or pack for school lunches..

That $1,000 in groceries is spent “ping-ping-ping” all throughout the month on your debit or credit card.

It’s not as pretty as a one line budget item.

If we don’t live our life that way, why are we told to manage our money that way?

There’s got to be a better way.

FLAW: Not representative of how you live your life

Another big flaw with traditional forms of budgeting is that none of us live our lives in one-month increments.

If your first paycheck gets deposited into your checking account on the 7th of the month, but you had three bills due the first week of the month, we know that’s a problem.

If you overspend one month, a blank slate doesn’t magically appear on the 1st of the following month. You carry that into the following month, just as you would if you had extra from the month before.

Not to mention there are a whole bunch of expenses in life that do not happen every month. Things like car repairs, home maintenance, gifts, clothing, kids activities, travel, vet bills, medical expenses and so many more.

Traditional budgets do not address the dynamic nature of life where the decisions we make one month impact the next.

There’s got to be a better way.

FLAW: Doesn’t show you want to DO with your money

A traditional budget is just a spreadsheet that doesn’t actually address your actions, behaviors, or how to manage your money better. It’s just a way to get organized but that’s about it.

Having a bunch of numbers in a spreadsheet will only get you so far unless you’re able to see how it all ties together. And most people fill out one of these typical budgeting worksheets only to look at it afterwards and sort of *shrug*, like “Okay, and now what? What good did this do me? What do I do now?”

In order to get control of your money, you need a way to see how one thing is connected to another and in an easy way. You need a way that can help you make sense of all the auto deposits, debit charges, withdrawals and just the timing of it all. If you think about it, there’s money coming in and of your checking account at all different times, in different amounts, and on different days.

A traditional budget doesn’t help you unravel this cobweb.

Imagine if a personal trainer handed you a gym training plan and all it said was:

Monday: arms
Tuesday: legs
Wednesday: total body
Thursday: off
Friday: back
Saturday: glutes
Sunday: off

You might look at that and think “Okay, that’s a start” but then you go to the gym on Monday and you realize you don’t know what to actually DO in order to train your arms.

A traditional budget is the same thing. Here’s all your expenses… yeah, but what do you DO with those expenses to get control of them and actually manage all of them?


It’s not you

The worst part about this form of budgeting being so widespread is that when people try to budget this way and it doesn’t work for them, they think THEY’RE the problem! They start to believe they’re not capable of being good with their money.

And that’s the furthest thing from the truth!

You can be good with your money. You aren’t flawed. The system you’ve been trying to adopt doesn’t make sense for you.

If you don’t live your life in some linear fashion or in a monthly bubble, you should not be managing your money that way, right?

The way you manage your money should represent your real life. The system needs to fit you. Stop trying to change to fit some archaic system.

If you’ve ever tried to map out a budget only to abandon it a few weeks or a few months into it and you’ve had those feelings of guilt, defeat, or even avoidance. It’s not that you failed the budget; it’s that the traditional budget failed you.

Most people can’t follow a budget like this because it’s such a flawed system.

That’s why I created a better way to budget – the Plan Ahead Budgeting MethodTM.

A better way to budget

The Plan Ahead Method™ is my trademarked method and philosophy for managing your money and ultimately planning your life. The Method™ has multiple elements, all of which can be personalized to you, and are focused on how you think, behave and make decisions with your money.

One of these elements includes our trademark system for budgeting and cashflow management.

The Plan Ahead Method™ is in stark contrast to traditional budgeting for a number of reasons:

  • It’s completely customizable to you. No two people are the same so no two plans for their money should be the same.
  • Everything about The Plan Ahead Method™ can be personalized to fit you, your goals, priorities and specific financial landscape.
  • Instead of only looking out one month at a time, it looks out months in advance to accommodate the way we actually live our lives.
  • Instead of just a list of expenses with no clear plan for managing them, it shows you how to juggle all of them too.
  • It helps you save for planned and unplanned expenses
  • It shows you how to remove the rollercoaster ride most people experience with money
  • It takes into consideration the timing of income and expenses
  • It’s dynamic so as new expenses emerge, financial circumstances change or priorities shift, things can be adjusted.
  • It shows you the impact of decisions on your money next pay week, next pay period, next month and even farther into the future.

Most importantly, it helps you to truly see your money clearly.

Once you can see, and I mean really see, your money clearly, you’re better able to seize opportunities, overcome whammies and make better decisions all around.

Take Action

To create your Plan Ahead Method Budget™ your first step is to get organized with your expenses, but not in the way you may have tried previously.

A big part of the Plan Ahead Method is how we look at your cash flow.

We categorize expenses into 3 categories to help give you more clarity about your money. These categories aren’t the typical money categories you see – like housing, transportation, or entertainment categories. We’re focused on the timing of your expenses, and that’s the only factor we look at when determining your financial categories.

To take your first step toward seeing, managing and planning your money, start here.

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