Regardless of your good intentions when creating your budget, these three mistakes are so common that you are almost certain to make at least one. These tips will help you fix a budget and get back on track.

According to experts, there are three primary reasons that budgets become “broken.”

Most people make at least one of these mistakes, but it doesn’t mean that creating a budget is a worthless.

It just means that you need some help in the budget making department. These tips will help you fix a budget and get back on track.

Mistake #1

Problem: Many budgets are not realistic.
Solution: Create a budget that is realistic for your family.

Many people tend to be unrealistic about the necessities such as food, clothing and shelter. Thrifty is one thing, but many people undercut these expenses to a point that the budget is totally unrealistic and impossible to stick to, and that leads to a broken budget. Create a budget that is realistic for your family and meets your family’s needs.

Track your expenses with a spending worksheet. Write down every single penny that you spend, recording the item or service purchased, the date and time and the amount of the purchase. This serves as an aid in several areas. You can see just how much you spend each month in certain categories and you can see where your money goes each month. If you are nickel and diming your budget, this will bring that to light.

Mistake #2

Problem: Many budgets do not connect from month to month
Solution: Create a budget that works for you from one month to the next

There are always things that can cause your budget to change from one month to the next. Your car registration can be due or your dog may need its yearly vaccinations. A budget is not a static document, it should be flexible enough to accommodate the expenses that do not occur monthly as well as unexpected expenses.

To fix this problem, you need to look at it from month to month and make the necessary adjustments. If you ran out of money one month and were unable to cover all of your expenses, then make some adjustments for the next month so that it doesn’t happen again.

In other words, spread out those occassional, or quarterly expenses, throughout the in-between months. For example, an $85 yearly vet bill should be spread out and saved for at a rate of about $7/month. Put this in a high yield saving account until you need to pay it.

This may be an ongoing thing, particularly if your circumstances change regularly. Life is not static, you can’t expect your budget to be either. Keep your budget flexible and work with what you have.

Mistake #3

Problem: Many budgets fail to track disposable income
Solution: Allocate every cent of your money to something

One problem that many people have with a budget is that when they pay off all of their monthly expenses and have funds left over, they don’t have a place for it. Spend your entire monthly income on paper before you do it for real. The money that exists after all of your bills are paid is your disposable income. Many budgets fail because people do not plan for where that “extra” money is going. What happens is the ‘extra’ money gets spent on things you don’t need, and savings and emergency funds are neglected.

To fix a budget you need to give all of your money a category. It doesn’t matter if you allocate that money for entertainment, retirement, savings or paying off debt, make sure that you slate it to go somewhere. Write down everything that you will spend, where you will spend it and make sure that you account for every penny.

Use the Sample Excel Budget Form to budget, or use software like Mvelopes.

Summary

The way to fix a budget is to address the three main reasons that budgets fail. When you correct these common budget problems, you can create a budget for your family that you family can actually live with and use.

You’ll be saving money and have peace of mind at the same time.