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Welcome to Money Talk for Real, a podcast where I talk about making money, spending money, and everything in between. I'm Nick, and in this episode, I want to talk about budgeting. You hear it a lot in the personal finance space, and there's sometimes more specifically, I want to talk about the truth about budgeting and why it fails most people. Budgeting is the most common money advice out there. It's the simplest form of taking control of your finances. Everybody tells you to budget. You hear it all the time. They say stuff like, just make a budget or track your spending or stick to your numbers. And honestly, I've said some of those things too. But yet most people don't, you know, they either don't budget at all or they try it for a week or two and then just completely fall off. So on this episode, I want to talk about kind of the truth about budgeting and why it fails for most people. Because the problem isn't that budgeting doesn't work, it's that most people are doing it in a way that they'll never stick to. And look, I've been there. I've tried tracking every single penny, every single dollar, trying to be perfect with it. And it just becomes exhausting. It is a lot of work. And that's where a lot of people just give up. And it's not so much that they they don't give up because they don't care about their money. They give up because the system that they're trying to follow just isn't realistic for their life. They follow some online system which sounds good, but again, it's a burnout. And budgeting, you know, it doesn't fail because it's a bad idea. It just fails because it's usually done the wrong way. Um, so the first reason that I would mention that budgeting sometimes fails people, again, is that people are trying to be perfect with it. They're trying to be just pristine, no mistakes, flawless the first time. They track every penny, they track every single dollar, every category, every expense. And that is the way to go on paper, and it sounds great, and that is what you would consider a quote true budget. But when you're doing it that way, it works for like a few days, maybe a week. But eventually life happens. We're all busy, we're all in the hustle economy, the grind stage. So when life happens, you miss something, and then it feels like you messed it all up and you kind of throw your hands up in the air and you get frustrated. If your system that you're using to budget requires that level of perfection, then you're probably not going to stick to it. Right? That that's not sustainable. You have to have a little bit of relief and reprieve in life. And doing it to that strictness, that level of perfection is going to be difficult. The second reason why budgeting is is it fails some people is it budgeting can sometimes feel like a restriction. It feels like you're telling yourself no all the time. And that's the diehard way of doing things that other uh personal finance people would say to do, and there's nothing wrong with that way, but I don't think that's sustainable. And you say things like, Well, I can't spend on this or I shouldn't buy that. So what happens? You eventually rebel against it because it is such a level of restriction. You again, not sustainable. If your budget and your system that you have, your your personal finance budget feels like a punishment, then you're going to break it. That's human nature is to rebel against it because we have got to have a little bit of reprieve, a little bit of comfort in life, right? And if it feels like there's too much restriction, that's going to feel like punishment, and you're going to break it. Another big problem is budgets sometimes are too rigid. They don't leave room for what I'm going to call real life, the unexpected expenses, the social events, the random things that come up. And you could argue, especially the diehard finance influencers could argue, well, the social events are out of the picture. If you're in debt, you know, you don't do anything in life except for get out of debt. Yeah, but life happens, right? You you have to you can die with debt easier, in my opinion, than you can die with not being around your friends and family. Social events do come up. Um, so so again, these budgets, if they're too strict and too restricted, they just don't leave enough room for those type of things. Life does happen. We are living on earth, we're doing our thing. And then the second that something unexpected happens, the whole plan falls apart if it's too restricted, if it's too dialed in, it's not going to be sustainable. A budget that does not account for real life, in my opinion, isn't a real budget. And um, I've had a few people that have sent in their personal situation for me to try to help them. And I've said on all of them that don't go to zero in these spending categories. Other finance educators would maybe say the same thing, would maybe say to do that, to back it to zero. In other words, never eat out. Well, that's not leaving room for real life. I recommend cutting back, not eliminating it completely, because again, you're going to have life that happens. And that's why I said it a minute ago. If a budget does not account for real life, then it's not a real budget. Because we're also trying to be realistic here, not something that just sounds good on paper. The whole theme of this episode is to talk about why budgets fail most people. It's because life happens and we don't account for that on paper with our budgets. The next thing, a lot of people focus on the tiny, tiny things. They focus on the small details, not the big impact. Cutting small expenses, tracking every little purchase, and those are important. In fact, I would I would certainly recommend doing that. But then they ignore the big stuff, like rent or their vehicle, their car, their truck, whatever it is, and then the major spending habits, right? A habit is a behavioral issue, and if you're not tracking that, you're doing yourself a disservice, in my opinion. You can't outbudget a big spending problem by cutting out the small things. The small things absolutely help. And and this is also going to be dependent on the person, dependent on their personal financial situation, because some people have a tighter gap or or you know less of a margin than others. But focus on the big stuff and the small stuff simultaneously if you can. But a lot of people just focus on the tiny things and they ignore the big expenses in life. Another reason why budgeting fails is there's no reason behind it for some people. They don't have a clear goal. And if you're out here and you're just budgeting to quote, be better with money, that might not be enough. Because if you're doing that, just you're you're kind of just going through the motions, as they say, at that point. You're just doing it for the sake of doing it to tell yourself that you're doing a good job. There's no real motivation to stick to it. And if there's no goal, then the budget feels pointless. And that's the what's the point mindset, right? That's why budgeting fails people. If there's no motivation, there's no reason, you feel like you're wasting your time, and why would anybody do that in life? Humans don't do stuff that wastes their time. Let me talk about for a second what actually will work. Um, if traditional, quote traditional, I'm using that term lightly, if traditional budgeting doesn't work, again, uh you're probably asking, well, you've told me all the negative things. Let's talk about what actually does. Keep it simple. Number one, you don't need 20 spending categories, you don't need envelopes for every single spending category in your entire life. You need awareness, but I don't think you need 20 spending categories. Focus on the big wins. Again, the big expenses. Focus on fixing those first. Because again, the small things matter, but if you can see bigger dollars changing in your personal finance, that will motivate you quicker. Think about this. If you got rid of a $10 monthly subscription versus if you got rid of a $1,000 car payment, which one is going to light a fire under your butt first? You're going to be more excited to get rid of that $1,000 monthly payment, right? That's that's what I'm saying. Focus on the big expenses first. The next thing, build flexibility into your budget. Give yourself room to live. Don't make it so strict and tight that you're just sitting in a prison cell at your own house with nothing to do with your life. Because again, if you do that, that sounds great on paper, but your motivation will go away and you will try to rebel against that. So give yourself some room to live. Let life happen in your budget. Also, automate what you can. Take the decisions out of it. And this could look like, for example, transferring X amount of dollars every paycheck to a separate account that you never touch again. It can be a checking account, but maybe just don't carry the debit card for that account. That reduces your temptation to spend money out of it. Maybe every paycheck you put $10, even if that, you know, $5, whatever it is, whatever you can do, just put it in there and automate it. It automatically transfers every other Friday when you get paid, whatever it is. Make take the decisions out of it. That will help you budget as well, if you can. That's one example. There's others that you can do. But the best budget, obviously, is going to be one that you'll actually follow. You need to have something sustainable, which is going to be one that you actually follow. Budgeting isn't always the problem. It's the way that most people approach the budget that's actually the problem. And if you simplify it and you make it realistic to allow for some breathing room in life, so to speak, and tie it to something that you actually care about, then it stops feeling like a chore. It stops feeling like work, it stops feeling like a job and it starts working. You don't need a perfect budget at the end of the day. You just need one that is sustainable. If you want more real, simple money advice like this, please follow the show on your favorite podcast player and leave it a five star review. I'd also like to walk through your personal financial situation if you're willing to send it to me. You can submit it on my website at money talkforreal.com slash debt help. That's money talkforreal.com slash D E B T H E L P. You can submit a voice memo there as well as a written text if you're uncomfortable doing it by voice. Anyways, thanks for listening to this episode. I'll catch you on the next one. This is Money Talk for Real.