Budgeting is weird, because almost every financial guru recommends doing it, and almost everyone who tries to do it struggles with it.

The truth is, there are a lot of things left unsaid when it comes to budgeting.

There’s a reason it doesn’t work…or doesn’t seem to work.

I’m going to explain how to actually budget effectively and cover some unanswered questions.

Zero-Sum Budgeting + Automation

I think zero-sum budgeting is the best way to budget, because it requires you to spend every cent on paper before you actually spend it.  And that’s awesome, because spending money is easy to do.

Here’s how it works:

  • Download a spending plan form.  Fill out every area that is automated (you can automate most of it), and then save it as a master copy.  This copy will only contain the areas that are automated and do not change.  Browse our forms.
  • Fill out the remaining categories.  Now save it again for the current month.  The remaining should be things like groceries, entertainment, clothing, etc..  Take your best guess at how much you’ll spend in each category.
  • Track your spending.  Download an app like Goodbudget to track spending.  If you’re married, your spouse can download the app and you can sync them so you can track your total combined spending.

Once you automate all of your static reoccurring expenses, you’re really only worried about tracking the rest of it.  I’ve chiseled my budget down to five categories: groceries, dining out, other entertainment, auto and clothing.  Everything else (investments, savings, insurance, tithe/giving and mortgage) is automated.  I still include them in my spending plan so that I don’t forget about them, but those areas are already filled in.  That means I only actually manage about $900/month.  Everything else is automatic.  And yes, my grocery bill is very low.

Why Budgets Fail

Normal people give up on their careers and their marriages, so it’s really not surprising that they give up on their budget.  Don’t be normal.  But most of the reasons people give up are reasons you can avoid.  Here are the most common:

  • It doesn’t seem to work.  Here’s the deal, it’s not going to work if you’re new at budgeting.  Budgets never work the first month, or the second.  Often it takes multiple months for budgets to really start being effective, but it’s worth the wait.
  • Not planning the specific month.  There are different expenses for different months.  If you’ll be attending a birthday party, you’ll probably need to buy a gift.  If it’s time to renew your license or your tags, you’ll want to put that on paper.
  • Getting off track and just quitting.  You’ll get off track.  You’ll forget to put some expenses in.  That’s perfectly fine, as long as you pick up where you left off and keep going.  Missing a week or a month doesn’t mean you have to quit.
  • Striving for perfection.  Your budget will never be perfect.  Trying to make it perfect and track every single cent is fine, until you start getting discouraged that it doesn’t work out.  There will always be missed money here and there.

Don’t give up or get discouraged.  Realize that everyone struggles with this and no budget is perfect.

What to Do if You Get Off Track

The most important thing you can do for your money is to track it.

Even if you completely stop every other part of your budget, tracking will keep you on…track.  At least you’ll know, by looking back, that you went way over budget.  In fact, if you don’t want to budget at all, at least track each purchase so you can better gauge the amount you’re spending.  This can be quite an eye-opener for most people.

The fact is, good budgeting is boring.  Like I mentioned earlier, I only manage about $900 each month.  The rest of my money is building my retirement, funding my children’s education, giving to my church and paying other bills.  All of those things will happen automatically.  In fact, if I just lived each month by taking out $900 in cash and spending until it was gone, I would still accomplish my major financial goals.

Budgeting gives you the ability to see patterns and adjust amounts based on what you spend and what you need to spend.

If you start to get off track, just keep tracking your purchases.  Even if you don’t ever open the budget document again.

When you come to your senses, you can easily pick up where you left off.

Find a good budgeting tool here.  For more on budgeting, check out our complete guide.

What are some major issues you’ve had with budgeting?