When we try to create a budget for our monthly living expenses, why is it that we are good at setting goals but not achieving them? Good morning and welcome back to Finance Friday. Successful budget planning requires a will to want to make changes, however, something equally as powerful is sticking with our plan. 3 reasons why some people fail to keep a budget:
We focus on the outcome and not on the process. Its important to have the end in sight but not at the expense of what you’re doing now. Most of budgeting is creating new habits and following them through. You’re not going to pay off that mortgage next month but maybe add a 13th payment in December when you get that bonus. If done right, the process will create the outcome.
We make drastic changes instead of small sustainable habit changes. Changing habits doesn’t mean completely uprooting your lifestyle. If you spend $500 monthly in Amazon, you’ll have greater success if you reduce the spending to $250 as opposed to reducing to $0. Remember, It’s the little things that we change that lead to your financial success.
We set goals that are boring versus exciting. I don’t know anyone that finds budget planning exciting. However, you are more likely to follow your plan if you make it fun. For example, if your monthly restaurant bills are $1,000 and your grocery bill is $500, why not take a cooking class for $250 and purchase groceries accordingly with what you are learning in class?
Again, don’t try to change your lifestyle. Change your habits in small ways, develop your process and have fun doing it! It’s hard at first, but with your Financial Planner as your coach, you can both work on the proper motivation for you so you can keep your eyes on the prize.
Now it’s your turn. What are some tips that have helped you create a budget plan? Please send me your answers and any additional questions to hector@hrcfin.com. Also, don’t forget to follow HRC Financial on Facebook and LinkedIn for more Finance Friday discussions.
Thank you again everyone and have a wonderful weekend!