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10 Reasons People Don’t Create a Budget

The backbone of a successful personal financial plan is the monthly budget. It’s the map - the blueprint - to financial success. Instead of just reacting to money problems that suddenly pop up, a spending plan prepared in advance tells your money what to do and squeezes every bit of value out of each dollar. We work too hard earning a dollar to want anything else.

Yet only 32% of families prepare one each month. Here are 10 of the most common reason that people do not create budgets: 

1. Budgets Create Limits

People hear the word “budget” and they think “bread and water." Many people don’t like the limits they feel a budget will place on them. That is understandable but also incorrect if a budget is done the right way. This negative assumption is why I try to call it a spending plan instead of a budget. Is this just a word game? Yes, I suppose. But if it helps you prepare a plan, so be it. Personally, I’ve found a budget to be the exact opposite of confining. It’s really liberating. How so? Because it frees me to spend totally guilt free because I know other dollars are already allocated to all of our expenses. The fear I’ll run out of money before I run out of month is gone. (For more, see: Budgeting Basics.)

2. Fear

They are afraid of what they’ll find out. Budgeting can be scary at first. You may not want to find out the cost of your latte habit. However, sticking your head in the sand isn’t the answer. Knowledge is power. Deal with the truth and move on. When we first started budgeting, I was shocked to find out how much we were spending on food (both groceries and eating out). No one likes to face cold, hard facts like these, but because we did, we were able to reduce our spending in this area. And truth be told, it really didn’t change the quality of food we eat. It just made us more efficient in how we use our food dollars.

3. Budget Abuse

They've experienced budget abuse in the past. Some people have used the budget process to abuse others. In reality, the budget was just another tool they used to manipulate and control others. Unfortunately a lot of good things (like budgets) have been misused. That doesn’t make preparing a budget bad. It just makes the abuser wrong. Don’t tarnish the benefits of a budget due to someone misusing it in your past.

4. Perception Only Poor People Need Budgets

They are misinformed about who needs a budget plan. “I don’t need to do a stupid budget. That’s for poor people.” Wrong! We have a responsibility to be good stewards of our resources, whether the resources are large or small. Don’t let your financial future be harmed because of your preconceived notion about who needs a spending plan. We all do.

5. Time and Effort

Budgeting takes time and effort. I totally understand how easy it would be to let budgeting slide. A streaming movie and quart of ice cream sounds much better than doing a budget. A lot of people have to fight off laziness each month to get the budget prepared. Budgeting is like many other processes we do regularly. Understanding the benefits and building the habit are the keys. I may feel too lazy to go to the grocery store, but I understand the benefits of eating and I’ve kind of grown accustomed to it.

Now that I’ve personally experienced the benefits of budgeting, I can’t imagine living without it. One of the reasons I could retire from full-time work at 49 was because we budgeted each and every month. If you enjoy being lazy, imagine how much more time you’ll have to laze around if you can retire early (just kidding, laziness isn’t a plus for anyone).

6. Lack of Know How

They don't understand how to prepare an effective budget. Effective budgeting can seem daunting to start. Do I do it on paper or on the computer? How detailed do I need to make the spending categories? How do I handle the irregular expenses? And so on. Here's a suggestion: Don’t try to figure it all out before you even get started. Trust me, you won’t. Start from where you are and well, just start. (For more, see: How to Create an Effective Budget.)

A simple list of things you need to spend money on that equals the amount you have coming in that month is a great beginning. Over time you can refine it. My budgeting process looks a lot different now than when we started. Don’t let the fear of starting keep you from doing so. You’ll never get better until you dive in.

7. Past Failures

They haven't stuck to budgets they've created in the past. Maybe you have tried in the past and it bombed big time. No worries. Try again. Few really valuable and meaningful things come easy the first time you try. Did you get a scraped knee learning how to ride a bike? If you’re like me you did. But if you don’t get back on the bike you’ll be sitting on the curb watching the other kids have all the fun. Get back on the budget bike. You learn by doing. Falling off the budget bike is okay. Not getting back on isn’t.

8. Marital Fights

They are afraid that budgeting will lead to marital fights. I have to be honest, the first few budget meetings I had with my wife didn’t go well. We both came into them with our own expectations and they didn’t necessarily match up. Part of a great marriage relationship is working together on tough things. It also includes putting our spouse’s needs ahead of our own. Once my wife and I stumbled our way through the first few budgets, we noticed it getting easier and easier. And we noticed that we both found some things to like about the budget. That’s what marriage is about - working together to make a better future for ourselves and our families.

9. Numbers Are for Nerds

They think budgets are only for people who love numbers. I'm not a nerd in the traditional sense, but I consider myself a "financial nerd" because I love numbers. I’m a CPA. A thrill for me is a column of numbers that adds up properly. I also get that a lot of people aren’t like me in this regard. They still need to do a budget, though. Maybe even more so as their “free spiritness” may lead them to a lot of impulse buying. The budget isn’t designed to squelch their free spirit. It’s to let them enjoy some impulsiveness without going into debt in the process.

10. Don't Need One

I’ve got plenty of money left over at the end of a month. Maybe you’re one of the lucky ones who have ample cash flow. Congratulations. All the more reason to budget. Extra cash laying around in your account is so easy to let slip between your fingers. Maybe one day your cash flow will be less and you’ll wish you had a few of those extra dollars you let float away in earlier years. As mentioned earlier, we have a serious responsibility to manage our wealth. Having a lot of cash doesn’t decrease that responsibility, it increases it. Can you have a larger amount of blow money each month for fun things? Sure. But if you don’t have a plan, the blow money can blow a hole in your long term plans.

Whatever your reason for not budgeting, rethink it. Creating a successful personal financial plan is the first step towards financial success. A great budget doesn’t have to be pages and pages long (ours is only one page, front and back). And it doesn’t have to take long to prepare. 

If your budget improved the efficiency of your monthly spending by just 5%, what would your effective pay rate be for that one hour of work? Probably your most profitable hour of the month. (For more, see: Best Budgeting Software for 2018.)