9 Reasons Why Budgets Don’t Work – Money Navigator™ International

Christmas is coming and shortly thereafter, the new year will follow. That means that we are starting the thought process for our new year makeovers. When working on your financial makeover or review, consider these 9 reasons why budgets don’t work and a simple alternative that does.

1. Inflexible: budgets leave you no wiggle room. In fact, budgets seem to be designed for exactly the opposite effect. Any deviation from the prescribed numbers results in budget breakdown.

2. Impractical: what looks good on paper often does not translate into practical, realistic goals.

3. Based in math: the black and white of 2 + 2 = 4, while correct, does not help with budgets because the expenditures that cause overspending come from emotional triggers. Hence, arithmetic may not be your best spending guide.

4. Punitive: society has turned budgets into a sort of punishment. Can’t you just hear the financial makeover television hosts barking at the families about sticking to a budget because they are obviously not smart enough to handle their money well? Budgets have become the punishment for poor money management.

5. Stigma: no one ever joyfully shares the wonderful news that their financial advisor has them on a strict budget. There is negative stigma attached to budgets that make them the last thing people want to talk about or even consider.

6. Nit-picking: budgets often have families penny-pinching endlessly to get them to work. So much time gets wasted on lowering cable subscriptions, cutting electricity usage, driving less to save gas, etc. Nit-picking like that only leads to budget failure because the family just won’t do it.

7. Not big picture: you can’t see the forest for the trees with budgets. There is so much focus on the minutiae that the larger picture of a well-rounded life and memorable experiences are often lost. The reason for a budget cannot only be in the numbers. If it is it won’t stick

8. No embedded reward: No incentives are incorporated into budgets. With financial goals often set so far into the future, budgets have no short-term incentives to stick to a financial plan.

9. Theory tested: Budgets are all theory. Practical applications fail all the time but consumers continue to subscribe to revised budgets only to find that the life-lab applications consistently fail.

There is an alternative. A cash flow plan prepared by a Certified Cashflow Specialist offers a realistic, practical, life-lab tested and approved financial plan. Flexibility and Rewards are incorporated directly into your working plan and room is made for unexpected life events – even retail therapy.
When budgets don’t work it is time to rewrite the script and find something that does and cashflow planning works!