Friday, July 6, 2012

Disadvantages of budget

Most financial advisers suggest us to create a budget that help us to control the spending. People can set how much spending for next month. They will spend any product and services that they have write before in the budget. Some people are success to decrease their spending with budget. They can save excess budget to piggy bank and then invest it at capital market.
However, the budget has also some weakness that we should know:
1. Budget is not flexible
Each people has different financial behavior. Some people cannot guess the next month spending. They just write the last month spending but they do not consider other things. Next month, they just buy what they have written on budget while they need to buy something else. It is not good to delay the spending while you need the things immediately.

2. Waste the time
For some people who does not have finance knowledge, they may confuse to build a budget. They may forget to record all of last month spending. As consequently, they always improve the budget every month and it waste time. Next month, the spending may also change so it must be changed again.
You should record what you have spend and what you have got every night. at the end of the month, you should  compute all of it and compare the budget. If your spend more than budget, you have to decrease the spending or increase the income.
If we have missed to record the spending in a day, the record will be fail. We must start to create the budget again and it takes time. 
3. Safe lifestyle decrease your lifestyle
Certainly, your lifestyle will decrease due its budget. We have thrift our spending and delete some "unnecessary" spending such as vacation, clubbing, and others. For some people change the lifestyle is rather difficult. They have to spend "unnecessary" things for their business. They may loss the client or business when they change the lifestyle.
4. Mismanaged life
Some budget creator is not able to allocate the most important things in their life. They spend the money to daily necessity only. They forget that they have to save for future. They may allocate the money to investment or saving.

5. incomplete planning
The budget is not complete and it is short sighted. The budget does not consider the future due it use the previous spending data.

6. Budgeting needs money
Some people ask financial planner to create the budget. As consequently, you have to pay the planner expensively.The financial planner is the expert who can create a good budget for you.

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