What To Do When “Traditional” Budgets Don’t Work

Traditional budgeting is a term used to describe the process of creating a spreadsheet or other type of document that lists every income source, expense category, and savings goal.

You can use this to track your progress toward your goals, but it doesn’t work well for long-term planning or for helping you make adjustments when the unexpected happens.

If this sounds like an issue you’ve had with traditional budgeting before, don’t worry—we have solutions!

Let’s take a look at the 3 ways traditional budgeting is failing you and how to approach your budgeting instead.

1: Traditional budgeting is just a spreadsheet

Traditional budgeting is just a spreadsheet, and It doesn’t actually address the actions, behaviors, or how to execute that plan. So having a bunch of numbers in a spreadsheet will only get you so far unless we aren’t also looking at “ How am I going to ensure this happens?” or  “What are the things I need to do and not do to execute on this plan?”

We need to be able to align our behaviors and mindset with our money goals. A spreadsheet is not going to do that for you or show you how to address the numbers in the spreadsheet.

This is like downloading a fitness training plan but never actually using it. You have the plan, but you don’t actually go to the gym, do the workouts, or get the material you need to complete the workouts. If you don’t execute the plan by aligning your goals with your mindset and behaviors, you won’t actually complete the program.

2: No one lives their life in monthly increments

You’re probably familiar with the idea of having a budget based on your monthly income, but it’s important to remember that not everyone gets paid at the beginning of the month. Some people have variable incomes and can be paid twice a month or even weekly.

If your income is variable, then your budget should reflect that fact by accounting for both highs and lows during different times of the year. There are also some circumstances where a person might need to adjust their budget throughout the course of each month (for example, if they lose their job).

The point is: financial planning in one-month increments (like traditional budgeting suggests) just isn’t realistic for hitting your long-term goals or planning for the future.

3: “Updating budget” doesn’t help your future budget

The third reason why traditional budgeting is failing you is that it’s not helping your future budget. Let me explain. When we use the word “budget,” we’re talking about our past decisions; how much money did I receive last month, and where did I send it? How many times have I gone to the movies?

We judge our past decisions rather than plan for the future. This makes people feel worse because they are always looking at their past mistakes instead of focusing on what they can do better next time around.

Let’s look at some solutions to help you get in control of your money

Now that you’re aware of the problems with traditional budgeting let’s look at some solutions you can do instead that will be much more effective.

  • Plan your numbers and think about your mindset and behavior
  • Schedule weekly check-ins with your numbers
  • Shift to planning ahead with your money

Let’s look at these solutions in more detail!

1: Plan your numbers and think about your mindset and behavior

When you come up with a plan for your numbers, always think about how you will execute that plan.

What are the things you will do, and what are the things you won’t do?

Think about both your lead and lag metrics. The idea here is that there are certain things you have control over, and there are things that result from those steps you took.

For example:

Lead metrics: Deciding, “I will check in with my budget weekly”, or “I will pay an extra $25 towards my credit card each week.” These are the things we can control.

Lag metrics: If you want more money in your savings or you want your credit card balance to be less – that is the result of doing or not doing something.

So when you’re thinking about your money plan, don’t just think about the numbers, but come up with a plan for yourself and how your mindset and behaviors will contribute to your plan. What will you do and not do to reach those goals?

2: Pick a day and time to check in with your numbers every week

Pick a day and time each week to check in with your numbers. And you can make this fun! The best plans are the ones that are consistent.

I check my numbers every Friday morning and always make a flavored coffee (which I love!) This makes checking in on my numbers fun and enjoyable.

Here are some suggestions:

  • Create a specific playlist with your favorite songs
  • Light a candle or use a diffuser
  • Go to your favorite coffee shop or make your favorite drink

Create an enjoyable experience that makes checking in on your numbers fun and less ‘daunting.’

Most importantly, pick a day each week, put it on your calendar, and create a consistent routine.

3: Shift to planning ahead with your money 

I would love for you to shift to planning ahead with your money and not being reactionary, or updating it after the fact.

If you’re going to spend any time updating your numbers, spend 90% of that time planning ahead with your money – only looking at what the paychecks are coming, what I  am doing with it, and how I am going to align my actions and behaviors with this plan. Spend 10% of the time or less thinking about the money you’ve already spent.

To plan for the future, do this: Plan one paycheck out ahead – what is all the money I am going to spend in the next two weeks? Do that three times, and chances are you’re going to learn a lot and get really good at it.

Then, add to that and plan for two or three paychecks out, then plan a little further and plan four or five paychecks out. Your goal is to work up to planning out at a minimum with ease – 3 months in advance. If you can do that, I promise that you’ve got just enough time to get ready for anything you have coming up without feeling stressed, pressured, or tight on money.

How To Budget- Free Resource!

We have an amazing resource for you that is absolutely FREE – our “Plan Ahead Method budget. I’ve been managing my money this way for years, and it’s a unique spreadsheet for planning many paychecks in advance.

The whole concept is that when you make a change to a paycheck today, it will show you the impact of that decision for your next paychecks, 1 month, 2 months, or 3 months now. This helps you plan ahead for expenses you may need 3 months from now.

And if creating your own spreadsheet seems way too overwhelming – just know we can help! Contact us or schedule a free 15-minute call to see how we can help you.

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