It's All in the Attitude, Dude!
One of the top reasons, if not THE top reason, so many people fail at budgeting is attitude. If you think of it as a penny-pinching sacrifice instead of a means for achieving your financial goals and dreams, how long are you likely to stick with it? Its like the difference between going on a diet and eating healthily. One is negative and restrictive; the other is positive and allows you to indulge now and then and still achieve your goals.
To increase your chances of success, work on your attitude first.
Many people refuse to budget because of budgetings negative connotation. If youre one of them, try thinking of it as a spending plan instead of a budget. Once youve attempted to budget and failed, the bad feelings associated with any type of failure can keep you from trying again. Dont give up!
Why does budgeting matter? Money is a tool that enables you to reach your goals in life, but until you know where your money goes, you cant make conscious decisions about how to use this tool effectively. A budget shows you exactly where your money goes and provides a spending plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, a college education, travel, or whatever your particular goals and dreams happen to be.
There are several universal budgeting concepts that every successful budget will include, but one of the most important features of a successful budget is customization to your needs. Dont try to force your lifestyle and personal situation into a generic, one-size-fits-all budget. If a simpler approach makes it easier to stay committed, then go for simplicity. If you stick with a realistic, effective budget long enough, the rewards will keep you motivated; in the meantime, do whatever it takes to keep yourself going.
One important aspect of a successful, long-term relationship is working towards common goals, and a budget is a means of achieving them. Couples who cant come to an agreement about savings towards common goals should sit down and talk calmly and rationally and come to a compromise to resolve this disconnect in their relationship.
Its okay to have individual goals that the other person doesnt share, and to provide for a way for those goals to be met, but its critical to have basic common financial goals that both people in the relationship agree to and are motivated to work towards. If you cant agree about saving towards those goals, youre going to be at cross-purposes that are going to be a cause of ongoing conflict. A budget centered around conflict and resentment is a budget doomed for failure.
If you still cant figure out why your budget isnt working, consider the psychological factors at work. What does money mean to you? Do you use it for reasons other than its obvious purpose? Do you use it as a self-esteem booster, to make yourself feel worthwhile? Do you enjoy the heady rush of making a new purchase? Do you use it as a sign of power or control in a relationship?
There are a number of good books about the psychological aspects of money that can help you spot these factors and help you work with them. See The Psychology of Spending Money.
If you jump into budgeting without a positive attitude about it, chances are high that you'll give up before you've seen the difference a budget or spending plan can make in your life. The secret is to work on your attitude first.