build_logo_nobackground.png

Why budgeting fails 80% of the time

Read Time (3 - 7 minutes)

Sharpening Focus

Budgeting in minutes, NOT hours!

80% of people don't live within their desired budget, and that's not for lack of trying. 

With a percentage this high, there is a systemic flaw in the way 80% go about budgeting. More than 13 Trillion in consumer debt proves this.

After 18 years, and hundreds of hours of research, we have identified important factors that differentiate between those who are living financial success and those who wish to be.

Getting to the Root of it

Busy vs. Productive

Most budgeting approaches involve a massive upfront planning and categorization effort, bank integrations, and heavy maintenance.

Our research has demonstrated that Budgeting fails because this traditional advice, and therefore the traditional products, actually have the priority order of budgeting tasks exactly reversed. 

Eager and well intentioned budgeters expend large amounts of upfront energy only to become exhausted and unsuccessful. 

Getting a hand up

The advancements in computing power and technology in the palm of your hand has completely changed nearly everything we do, yet, budgeting still has the same old tired feel and approach. 

It's now possible for your smartphone to calculate your daily budget automatically. 

Think of it like being on a weight loss program, we all know that maintaining a journal of what you have eaten and stepping on the scale DAILY is what it takes to track your progress and hit your goal.

The same is true for budgeting, but until today it has been completely impractical to have a daily budget.

 

The Secrets - Part 1

Ready? Tracking your expenses (like a journal) is by far the most important step toward financial success.

One might even say, stop Budgeting and start tracking. NOW!

Top 20%

Tracking is the first and MOST important fact that almost everyone gets wrong.

 

You must keep reading to fully understand. 

 

The Secrets - Part 2

An expense has no meaning until compared to other expenses. 

What does this mean?

We humans have terrible memories, which makes it nearly impossible to know from memory alone if spending habits are in any way close to income and goals relative to a given timeframe.

 

Making informed spending decisions requires the context of the whole picture.  

The Secrets - Part 3

Toward goals - not Away goals

Neuroscience and social psychology both tell us that small, tangible steps forward provide the positive reward our brains need to truly change and control our behavior. 

Tracking daily and hitting a very tangible daily budget is the pinnacle of a toward goal. This means you will not turn away from the daily budgeting method to protect your ego or feelings. 

 

you are missing daily expenses

This is a simple yet critical concept. 

Your daily expenses are not just things like soda, coffee, and parking. Your daily expenses also include 1/30 of your monthly expenses. If your house payment is $1,400.00 per month, that is actually a daily expense of $46.67. 

Now you see how you could easily spend more on eating out than housing. 

This same concept is true for groceries, even if you only go to the store 1 time per week. That needs to be thought of as  1/7 of your daily budget for the next 7 days. 

 

not that!

Please don't do these 2 things!

1. Your available balance on your debit card is not a budget! 

2. A budgeting app that has a "feature" that syncs your bank account automatically is about as useful as a screen door in a submarine. 

 

Seriously! 
 

 

Bringing it all together

The heavy lift, negative psychology, and overall impractical nature of a traditional budgeting programs has caused crippling debt. 

Moving forward, attention should be focused on small positive steps forward. Those steps should be informed by daily tracking (in minutes not hours).  

Tracking the easy way

Now that you understand how critical it is to track your expenses daily let's look at some easy ways to weave that process into your daily life. 

Tracking your expenses daily can be a simple journal or list. If you choose this method, comparing expenses in context and calculating the daily portion can become tedious.

Instead, we recommend this simple and amazing app.

Using Build - Budget Expense Tracker means you will never miss your daily budget again. It is blessedly simple, you enter your income and expenses only as they occur in your daily life and the app calculates everything else.

We can't guaranty this but we think you will hit your budgeting goals, your savings will skyrocket, money concerns will be a long-lost memory. You will have more power than you can imagine over your spending habits and they will be perfectly in line with your life goals. College savings, that dream house, that dream car are all within reach.

You know the secret! 

Featured In

fullsizeoutput_3c54.jpeg