Help - I can't budget!

Q – I’ve tried budgeting, but it just doesn’t work for me. I make a budget, then 2 months later, I run short of money. What am I doing wrong?

A – Don’t confuse budgeting with spending. If you put $200 in your monthly budget for clothes, you have to spend $200 - or less – on clothes every month, otherwise that budget line is inaccurate. Or, you build a budget and squeeze down some expenses to show that the numbers work, then over months see that the budget is not working, and think you’re no good at budgeting. The budget really does two things in my opinion: (1) reflects the reality of our current spending, and (2) provides goals to lower expenses.

The initial budget should reflect current reality – as ugly as that may be. Then, go line by line and evaluate if the expense can be reduced. For example, change cell phone plan, save $12. Update your budget once you change phone plan, not before. For other expenses, such as clothing, that requires an examination of why the spending is what it is. Shopping at high-end stores or just buying too much? This is an expense line where, if you sense that spending is the problem, you set a goal in your budget and then be more mindful when shopping at the mall. See how well you keep to it after a few months. This is really about being honest with yourself. What is more important: shopping or having a savings account with $2,500 in it?

I'm convinced people would be shocked by how low their expenses would be for a month if they tried to live at "bare minimum" as I call it. No eating out, make all meals at home with simple ingredients. Only drive the car when necessary and do multiple errands in one trip. Cancel all streaming for the month. And, of course, buy nothing unless it's necessary. Now, you probably can't live that way every month, but you can solve your budget problem by solving your spending problem.