4 Reasons Your Budget Isn’t Working and How You Can Solve It

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Do you ever find yourself looking at your bank statement and wondering where most of your money went this month? It can be frustrating, especially when you spend hours learning about the latest budgeting hacks and have numerous excel sheets to help you follow your budget. So, why do your budgets never work? Let’s find out!


  1. Your Budget is Unrealistic

While budgeting is essential, making a budget in sync with your financial profile, spending habits, and monthly commitments is even more important. Take 24-year-old Rahul, for example, who earns a monthly salary of Rs. 50,000, and though he lives with his parents and doesn’t have to worry about paying rent, his budget keeps failing.

The reason: Rahul hasn’t taken into account his fixed and variable expenses. When Rahul maps out his budget, he sets unattainable targets that do not adequately account for his current wants and needs. 

Pro-tip: You can create a realistic budget by setting practical financial goals and taking into account your known and unforeseeable expenses, and saving plans for the future.

  1. You Often Have Unaccounted Expenses 

Rahul likes to go out with his friends on weekends, and buy the latest branded sneakers and video games; he also wants to save and invest for the future. He has monthly long-term SIPs that amount to Rs. 35,000, leaving him with Rs.15,000 for leisure activities and other monthly expenses. But Rahul also likes to take impromptu holidays, and since these trips are last-minute add-ons, he often ends up shooting over his budget. 

To avoid making the same mistake as Rahul, consider the reality of your spending habits first. 

Pro-tip: For your budget to work, you need to make room for ad hoc spending too. Have a realistic budget where apart from savings, you have adequate overheads for lifestyle spending as well.

  1. You Don’t Have an Emergency Fund

Life is unexpected, and the lockdowns and pandemics are a case in point. A side effect of these unprecedented events: Being rendered jobless and having to take pay cuts. For those who hadn’t set aside an emergency fund, both these situations were nothing short of a calamity.

Not making provisions in your budget to include an emergency fund hampers your finances when faced with a sudden unforeseen expense. This could lead you to tap into your investments or savings, or worse, take on debt.

Pro-tip: Ensure you are never caught in a financial predicament by setting aside funds each month. A good rule of thumb is to park at least 10-15% of your salary in an emergency fund. Put this in a savings account that you don’t touch; it will come to your rescue in dire situations.

  1. Your Budget Doesn’t Match Your Needs

Budgeting gurus often claim to have the secret formula that will help you craft the perfect budget. Yet your budget keeps failing? The truth is when it comes to finances; there is no ‘one size fits all’. While it is good to embrace the key fundamentals of budgeting, it is also a must to keep in mind that everyone has a different lifestyle and financial goals. 

Once you tailor-make your budget to match your standard of living, managing your finances becomes much easier. 

Pro-Tip: Don’t miss out on giving yourself a little treat every once in a while. Build these good habits but also make sure you enjoy the process of budgeting. 

In summary:

Enjoying the fruits of your labour is the nicest reward for all that hard work you do. But the best way to do it guilt-free and without the worry of debt is to customise your budget to factor in your future financial goals, your current wants and needs, your current financial obligations and your emergency fund. 

There are also numerous payment platforms that can help you enable spend management, such as Simpl. You can shop for all your leisure needs as well as pay your bills with just 1-tap. At the end of 15 days, you receive an itemised bill and can pay the money back.

With a practical approach and a realistic goal, it won’t be long before you start seeing the results of successful budgeting!

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