Budgeting is essential, especially for those who face financial problems in their life. A proper budget can make you financially independent, but an improper budget can put you in a debt trap. Budget means estimating the expenses and income over some time and planning financially accordingly. 

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Budget is a part of financial discipline or a discipline in money terms. So making a proper budget is very important, and I know that many of you had already made a budget but failed to execute it for many reasons. In this article, we will discuss some common reasons for budget failure. 

A lot to know, a lot to discuss, but before we begin, do comment down if you face any financial problem in your life, and I will definitely tell you its best solution.

Common reasons of a budget failure

#1 Wrong estimate

Budget is all about estimating the income and expenses, and many people fail in proper estimation. If you have time, I will recommend you read the book on cost estimation by Daniell. A. Nussbaum. This book will definitely help to correctly estimate your expenses for the rest of your life.

In brief, divide all your expenses on a frequency basis. You can understand it easily with the help of the below-given examples:

• You might go to the office every day by car. So expense on fuel is your daily expense, and you can easily estimate the daily expense on fuel.
• If you eat from a restaurant on Sundays, then the expense of the restaurant is your weekly expense.
• You may buy new clothes on Christmas, so expense on Christmas is your annual expense.

So you have to divide your expenses frequently and estimate their value. To calculate the cost of fuel, you need to simply multiply the car’s mileage with the price of the power. In the same way, you can easily estimate all your expenses.

#2 Made irregular expenses

I know that it is not possible to estimate all the expenses. There are some irregular expenses which depend from time to time. Like one day, you spend some money on ice cream, another day you make an expense on pizza. I am not saying that spending on luxury food items is a bad thing. You are earning, and it is ok to make expenses on ice cream and pizza. But it creates a lot of problems when you do not include it in your budget.

You may think that these small expenses do not create a difference, but actually, they do. A household spends 5-10% of their income on such small things, and sometimes it becomes the primary reason for their budget failure. 

Since it is tough to estimate them, it is best to budget them properly. There are many irregular expenses, so I have written a dedicated solution for this query that is “ How to budget for irregular expenses? ”. You should read it if the primary reason for your budget failure is irregular expenses.

In brief, you can make small funds amounting to some percentage of your income only for meeting irregular expenses and make all of them out of it.

#3 Use of credit card

Credit cards are the biggest blunder of budgeting. I have already discussed that a budget simply means estimating the income and expenses. So why is there a need to take a short term loan from a credit card?. If you are using a credit card, then burn it today because many people do not realise that they are spending their own money by using the credit card, and they destroy their life by trapping the credit card debt trap.

You might have already been trapped in the debt trap and facing a lot of problems. In that case, you should focus on coming out of the debt trap quickly and, after that, focus on budgeting.

#4 Unstable Income source

Apart from expenses, sometimes, income makes it difficult to execute the budget. Many people in the world do not have a good and stable income source which is the primary reason for their financial problems. Also, about 80% of the population survive only on one income source, which is their salary in most cases.

You should focus on other income sources, especially passive income sources, reducing your dependence on the monthly salary. Passive income also helps in financial freedom, and Warren Buffet once said that if you cannot earn while you sleep, you have to work until you die.

So focus on increasing the number of income sources, which will also help you make a flexible budget. There will be a day when your significant expenses will be like your irregular expenses.

#5 Over expectation from yourself

Some people over-expect themselves and make a very, very tight budget which only includes expenses on necessary items and does not consider comfort. 70% of the budget fails because of over-expectation. It is almost impossible for a person to travel by bicycle who used to travel every day by car.

Over motivation is the main reason for over expectation. When we start a new thing, we are highly motivated, but with passing time, our motivation drops rapidly, and we fail to accomplish our goals. So make a proper budget which you can execute, which is good for you and your financial life.

Ending Note

I know that it is difficult to control your expenses, so focus on more income sources, which will help you avoid small costs and afterward, life is like heaven for you.

With this note, it is time to end this article and, as always, “ God Bless You All.”

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