A Rigid Budget Will Die A Quick Death

An inflexible budget is doomed to failure.  Our budgets are intended to help us control our money so we can achieve our financial goals.  Sticking to a personal finance budget is important, but too much rigidity often backfires.  We have to learn to be flexible with our budgets for them to succeed in the long run.  Remember, slow and steady wins the financial race.  We want our budgeting efforts to last a lifetime, not to fizzle out in the first few months.

5 tips to keep your personal budget flexible and alive

Flexibility is one of the keys to maintaining a healthy budget.  Here are some ideas for keeping your budgeting efforts flexible to keep them alive!

1.  Create a custom budget each month

Your budget or spending plan should be customized for each period.  Sure certain expenses stay the same every month, but some things fluctuate or only occur once in awhile.  Your monthly budget needs to be a living document.  It needs to evolve as life does.

Make sure you take a little time at the beginning of each month to make a list of expected expenses that will occur in the upcoming thirty days.  Also, revaluate the amount you are budgeting in each of your spending categories.  You may need to increase or decrease certain things to more closely match your estimated expenditures.

2.  Don’t be afraid to make mid-month budget adjustments

Continually reevaluate your plan as you proceed through the month.  If necessary, move money from one category to another to make your budget reflect real life.  Our budgets are just plans.  They are not written in stone. 

One budgeting goal is to avoid overspending.  It is important that we are firm in our resolve toward this end, but we need not be rigid about the amount spent in each category.  Move money around to make things work.

Of course, you don’t want to rob your grocery category to make an impulse purchase, but if your electric bill runs a little high, you might need to take some away from your eating out category to cover it.

3.  Create new budget categories when needed

If you have an expense that seems to keep catching you off guard, then create a specific category for it.  I had to do this for children’s activities.  We kept spending money to allow our daughters to participate in extracurricular activities, but we didn’t have money set aside for it.  I kept having to take it out of another category.

This unplanned expense often left us short in another area.  Be sure to capture these expenses and create a category for them.  I’ll even create the category mid-month so that I don’t forget to budget money for it the next month.

4.  Set money aside for personal spending

We all want to feel like we have some individual control over how we spend our resources.  What is important to one person, especially in marriage, may not be a priority for the other.  I think the best way to handle this is by allowing each person a certain amount to spend each month.

Assign each spouse an amount each month that is their money to blow however they want.  It may not be much when you are running your debt snowball, but at least it is something.  The feeling of control will go a long ways toward keeping your budget alive.

5.  Discuss and agree on the monthly budget up front

If you are married, go over the budget with your spouse before the month begins.  Be sure that you are both in agreement and committed to the plan.  This will help avoid sticky situations as the month plays out.

A budget that is created and ratified by only one spouse will feel rigid and restrictive to the other member of the marriage.  You have to work as a team for the budget to succeed over time.  Participation in the process is the best way to achieve buy-in.

A flexible budget is a budget we can live with today and tomorrow

We want our budgeting efforts to succeed.  A great way to keep them alive is to remain flexible.  A plan must change as the situation changes for it to remain viable.  A rigid budget will only create frustration and resentment.  It is of the utmost importance for us to avoid these pitfalls as we budget our money.

What do you do to keep your budget flexible?

Photo by jhull