You know what’s harder than forcing yourself to create a budget? Actually following it! Yes, keeping to your budget isn’t supposed to be easy – but it isn’t supposed to be super difficult either. It’s not meant to “punish” you and prevent you from having an enjoyable life.
The whole point of having a budget is to ensure you’re spending within your means so that you can meet your long-term financial goals (including retirement) and are better prepared to handle any financial emergencies that happen during the course of your lifetime.
So why do some Singaporeans end up deviating from their budgets in the first place?
Here are 4 major reasons why Singaporeans end up wrecking their budgets:
1. The Budget is Too Strict and Unrealistic
Let me ask you this – if I said you had to budget yourself to $150 a month on groceries, $100 a month for transportation expenses and $100 a month on entertainment/dining out, you’d probably use a few expletives to describe how crazy that budget sounds.
Unfortunately, there are people out there who set such unrealistic numbers for themselves in the hope of saving as much cash as possible in the shortest amount of time possible. Some people might force themselves to adhere to such an unrealistic budget for a while – but they all crack eventually.
And when they do – they’re going to want to indulge after a few months of denying their spending impulses. That’s not to say you shouldn’t adjust your budget to cut out unnecessary expenses. But cutting back too deeply can feel like punishment after a while – and nobody likes punishment.
2. Failure to Control the Impulse to Spend
You can hire the best financial planner in Singapore to create the absolute best budget for your needs – but if you can’t control your impulse to spend all of your money on designer clothes, fancy dinners, branded bags or any other luxury items – it doesn’t matter.
I’m not going to say that beating you spending problem will be an easy thing to accomplish. But if you have a problem kicking the spending habit, here are some approaches you’ll want to check out:
- The 50/30/20 Rule
- Distinguishing Wants from Needs
- Looking at Your Purchases from a Labour Perspective
If you can take care of your spending problem, you can break the habit of wrecking your budget.
3. The Budget Denies Life Enjoyment
Is it possible to have a budget and STILL be able to enjoy life? Of course! A budget isn’t self-imposed punishment. But then again, there are people who think that having a budget means denying any fun activity that costs money.
The irony is that many people who deny any sort of “leisure” spending end up splurging on items they denied themselves in the first place. After all, how long can anyone stick to a budget that denies your ability to enjoy life a little?
When it comes to your budget, it’s better to allow some flexibility for leisure purchases (ex. $150 a month) so you can still enjoy life without wrecking your budget!
4. Failure to Account for Non-Monthly Expenses
Not accounting for certain expenses is a big reason why people wreck their budget. Sure, you might have spent hours going through all of your statements and bills to determine your monthly expenses – but did you really account for ALL of the expenses you can expect to pay?
The tricky thing about non-monthly expenses is that they can easily escape your notice because most of your statements come in every month – and those are the statements you use to create your budget!
Here are some of the expenses people forget to take into account when following their budget:
- Holiday Gifts (Christmas, Hari Raya, Chinese New Year, etc.)
- Birthday Gifts
- Children’s school supplies
- Memberships and Subscriptions (annual/quarterly fee)
- Insurance Products (annual fee)
- Holiday Travel
- Home & Car Maintenance
So don’t forget to take stock of all your non-monthly expenses when creating your budget (or account for them with your existing budget – it’s not too late). Otherwise, these expenses could sidetrack or even wreck your budget.
What are some other reasons why Singaporeans end up abandoning their budgets? How did you resolve the situation? Share your experience with us on Facebook! For even more useful information on everything personal finance, visit MoneySmart today!
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