'I help women get on top of their money. Here are 3 budgeting mistakes I see all the time.'

“I’ve tried so many different budgeting templates.”

I was speaking to one of our students, and I could hear the embarrassment in her voice. She felt like she’d failed. She looked like she was about to cry. My heart sank. 

If only she knew how common this was. So many people beat themselves up for not being able to stick to a budget. They try again and again hoping maybe this time...it will ‘work’. 

When it doesn’t, eventually, they start to internalise all the failure and think: “There must be something wrong with me. I suck with finance. I’m not a numbers person.”

I’ve seen this so many times over the years. 

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See, a few years ago, I started a financial education platform to help people take control of their finances. I worked with financial professionals to pull together our flagship Mastering Money program, which today, hundreds of people have successfully completed and transformed their financial lives through. 

So, over the years, I’ve had the opportunity to support many people on their financial journey.

I get to see common mistakes people make, as well as what is successful in helping them turn things around. So many of our students come to us stressed about their finances, but within months, they’re feeling confident and in control.

One of the things that unlocks tremendous change for our students (and can for you as well!) is changing the way they think about ‘budgeting’. 

Here are 3 common mistakes I see people making when it comes to budgeting:

1. Trying to plan for the future without looking to the past.

Does this sound familiar? One day, you have a “I’m changing my life” moment. You’re sick of feeling financially stressed and you tell yourself you’re finally going to “get your finances together”. So you make a list of categories: groceries, clothes, entertainment…

And then you start assigning a random number to each category. You tell yourself: “Okay, this month, I’m not going to spend more than $100 on clothes.” There it is. Your budget.

If that sounds familiar, I’ve got some bad news for you: that’s not a budget, that’s a wishlist. You’ve plucked out arbitrary numbers from thin air, and created a budget that works… on paper. 

But it never seems to ‘work’ in real life… and that’s because it’s not based on real life. 

The first step to creating a budget is not looking at the future, but looking at your past. How have you been spending your money? Where does your money go?

When you first look at how you’ve been spending money until now, the budget you create for your future is going to be far more realistic because it is informed by real life data. 

This one change in the budgeting process has been a game-changer for so many of the students, allowing them to create realistic spending plans that actually align with their lifestyle. 

2. Expecting your budget to do the ‘heavy-lifting’. 

Imagine you’re planning a road trip, and you’ve mapped the roads you need to take to your destination. Now what? Do you sit there, staring intensely at the map, waiting for the road trip to magically pop out of the map?

No, right? The map is just a guide to help you stay on route. It is a tool. You have to be the one to create the road trip. You have to get a car, fill up petrol, and drive the car... The map isn’t going to do that for you. YOU bring the road trip to life.  

A lot of people think that simply having a budget is going to change the game. Much like a map, a budget is really just a tool to keep you on track. It can signal when you’re going too far off track, or which spending areas need more review and attention... 

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But ultimately, the budget reflects your choices, your lifestyle, and the systems you have in place to manage money. It can’t change those things, it can only reflect them. 

This is why budgeting is a pretty small part of what we teach our students, because if your money systems, mindset and behaviours are not aligned towards financial success then a budget on its own isn’t going to help much. 

3. Forcing yourself to do things in a way you hate because you think it’s the only way.

One of the big reasons budgeting doesn’t work for a lot of people is because they’re trying to ‘force’ something that doesn’t align with their personal preferences.

People put so much pressure on ‘budgeting’ as though it’s the ONE thing that’s going to magically fix their financial life (It’s not). And if they don’t get it right, they’ve failed (you haven’t). So they better keep trying budgeting templates (...or maybe you need to try something else?) 

It’s like exercise. You keep trying to force yourself to workout until you finally realise that the best, most sustainable form of exercise, is one that you enjoy. 

Managing money is the same thing. There are lots of ways to do it, and what works for you will be personal to your preferences and lifestyle. 

Some of our students love budgeting apps, others use spreadsheets, some love pen and paper, and some just automate everything and keep the ‘manual’ work as minimal as possible. 

Budgeting is a means to an end. Fix your sight on the ‘end’ (your financial goals) and give yourself permission to be flexible in the 'means' (tools and strategies) to get there. 

Paridhi Jain is the founder of SkilledSmart, an independent financial education platform helping adults learn to save and invest their money. For more money tips, you can grab a free e-book on “5 Money Mistakes Costing You Thousands” via their  website, and follow them on Instagram.

Feature Image: Supplied/Mamamia.