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Stop fooling yourself with your budget

Who are you kidding? You may have the best intentions to save money by sticking with a budget, but you might not be following your budget to a T.

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    A wallet containing cash and a Visa card in Surfside, Fla. ou may have the best intentions to save money by sticking with a budget, but you might not be following your budget to a T.
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If your budget always seems to fall short, you might tell yourself it just doesn't work or that you're plain better off without one. However, the problem might not be the budget, but rather the person who created the budget — you.

A spending plan isn't going to follow itself, so if you get into a pattern of cheating on your budget and making excuses, you might never stop overspending. An honest examination of your budget and spending behaviors might reveal clues such as these as to why your budgets haven't worked in the past.

1. Overstating Your Income

Overstating your income doesn't work when creating a budget. Obviously, you need to include all your income when budgeting, but only if the income is regular or consistent.

Some people make the mistake of including overtime income in their budgets. But since overtime income can fluctuate from paycheck to paycheck, adding this income to your budget can make it appear like you have more money than you actually do.

If you base a budget on money you don't have, you could end up overspending throughout the month, and you might have to use a credit card to get by.

2. Denial About How Much You Actually Spend

Not only are some people in fantasyland about how much they earn, they're also in fantasyland about how much they spend. Guesstimating monthly expenses isn't going to work. You need to be as realistic and accurate as possible.

"A budget should always include actual numbers, such as the actual income received that month and actual expenses," says Michelle Schroeder-Gardner, author behind the personal finance blog Making Sense of Cents. "Too many people use numbers that they estimate or numbers they wish they were at, which is a big mistake because an estimate doesn't help you grasp the real picture of your finances."

To illustrate, if you normally spend $120 a month on fuel for your car, don't under account for this expense and only budget $80 a month, unless you plan on adjusting how much you commute. Take a look at bank statements or monitor your spending for an entire month to get an accurate picture of your expenses.

3. Never Reviewing Your Budget

A budget isn't a Crock-Pot, so you shouldn't expect to set it and forget it. In the beginning, your budget won't be perfect, and you'll need to make tweaks here and there until you get it right. Also, some unexpected expenses might result in extra spending, so you have to monitor your budget regularly to make sure everything stays on track. And if you spend money unexpectedly outside the budget, be ready to adjust or reduce how much you spend in other categories to avoid overspending or having to use a credit card.

4. Keeping Your Money Too Accessible

A budget is the perfect tool if you're always in the hole. But a budget doesn't magically cure a spending problem. You still have to recognize your weaknesses and limitations, and work in harmony with your budget. If you have a problem controlling spending, yet you walk around with extra cash and credit cards in your wallet, there's a pretty good chance that you'll cheat and blow your budget. Don't make it too easy to spend money. Only carry the cash you'll need for the day and keep your credit cards at home.

5. Forgetting to Budget for Splurges

You need to include a little splurge money in your budget so it doesn't feel like you're depriving yourself. Giving yourself spending cash might seem a step in the wrong direction if you're trying to save money. However, depriving yourself almost always guarantees that your budget will fail.

"No budget on earth will work long-term if you don't allow for some fun stuff, even if it's as small as a chocolate bar once a week," says Avery Breyer, best-selling author of Smart Money Blueprint: How to Stop Living Paycheck to Paycheck.

6. Stealing Money From Other Spending Categories

This is your budget, so you have to decide a reasonable amount to spend in your various spending categories. If you want to eliminate a category in order to put additional cash in another area, this is entirely up to you, but you shouldn't start a practice of stealing money from essential categories to satisfy a need for fun.

If it's the 20th of the month and you've already blown through your entertainment budget for the month, don't steal $100 from your housing budget in order to have a good time with friends this weekend. Spending the money you need for essential expenses can put you in the hole. And again — what's the point of budgeting if you don't stick to it? Be honest with yourself, and your money will thank you.

The Christian Science Monitor has assembled a diverse group of the best personal finance bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link in the blog description box above.

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