Realistic budgeting

Like a lot of PF bloggers, I am all in favor of budgeting. As I previously wrote here and here, in order for your budget to work, you need to know how much you make and how much you spend.

I will add you also need to be realistic. When trying to get your finances under control and address financial issues, cutting expenses is the first logical step, but it still needs to make sense for your situation.

If it doesn’t, your budget will fail, period.

I remember when I started my very first budget. I had tracked all my expenses and income, and I could clearly see room for improvement.

I previously confessed my eating-out habit used to cost me $ 300 to $ 400 per month. I decided to just remove it altogether. It didn’t last very long because it was not realistic for my personal situation.

I was not going from constant eating out to becoming a home chef overnight. It is a bit like trying to quit smoking cold turkey. Very few people are actually able to achieve this.

Same goes for groceries. I still tend to think my grocery bill is higher I would like. But when I take a closer look, it is realistic for me. I often read about how some people can feed themselves for an entire week with $ 20.00. I sure am envious, except I can’t do this, because, a). I am not a vegetarian, and b). I live in Vancouver where everything is very expensive.

There are items you won’t be able to remove or cut from your budget such as your rent or mortgage, or your minimum debt repayments. Don’t delude yourself in thinking otherwise.

It is quite probable your actual budget will not be like your fantasy budget. I would love to be able to live off one paycheque and allocate the other between debt repayment and savings. But it is just not realistic.

Before diving into your budget, have a close look at your personal circumstances. It is the way to financial success.