Saturday, July 7, 2012

Why budget fail?

Some people cannot use the budget well. They still can manage the money well. At the end of month, the actual spending is higher than the actual income.
The aim of budget is to assist people to manage the stream of money. With the budget, we try to live with restricted sources or money.  Here are some reason why budget fail:
1. Missed in spending computation
Some budgeter, the people who make the budget,  cannot compute the actual spending well. They have forgotten to include some spending in spending section. Perhaps, they missed some uncommon spending.
The yearly incomes such as taxes, house rent, property rent, and else are recorded in January only. It makes the spending volatile. The budget creator should divide the yearly spending with twelves. Each month you can write the spending.
2. Spending Miscalculation
The over optimistic income that is recorded in budget could make the budget fail. For example, The budgeter believes that they receive royalty $ 1,000 in a month whereas the last royalty is only $ 900. For uncertainty income, we cannot except the higher value. Record the lower value for royalty such as $ 800, $ 700, or lower.
Sometimes we receive yearly income such as property rent, consultant fee and other. We must divided it into 12 and record the result each month.
3. Undisciplined
Some person often buy more stuff and ignore the amount spending that he or she have been recorded in the budget. They have been tired to make budget but they ignored it. The extravagant people often spend more money and they do not want to change their lifestyle.
If they want to buy the expensive cloth, they have to computed the income before Is the income can cover the lifestyle?
4. Not Flexible.
The budget creator is inflexible. They do not tolerate the increases of product such as food. They still cut the food spending so they just buy fewer food. Surely, It makes the budget fail. The family will be strave due its insufficient of food.
The budgeter should be flexible to increase the spending if it is essential. They can trim down the spending by using coupon.

5. The software damage
The damage software can damage your budget too. Be sure to make the good budgeting software. If you cannot make software, you can use simple spreadsheet such as Microsoft Excell or Linux. There are some online spreadsheet such as Google Docs and Zoho Write.

Read Also:
Disadvantages of Budget
Pros and Cons budgeting your money
Financial Planning for retirement

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