7 Main Reasons Why Your Budget Sucks ...

Everyone needs a budget. This way, you know where your money goes each month. A budget keeps your personal finances on track, and it ensures you always have cash flow to pay bills. If you don't have a budget, you might overspend on entertainment and recreation, and have little cash for important bills, such as rent or the mortgage. But just because you have a budget doesn't mean it's a good budget. Your budget might suck -- to the point where it's not working for you.

Here are seven main reasons why your budget sucks.

1. You're Allocating Too Much for Entertainment

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It's okay to set money aside for recreation and entertainment, but if you allocate too much, you might end up living paycheck to paycheck, or you may not have cash for more important bills. Recreation and entertainment are useful, but in moderation. If you're struggle to live within budget, decrease how much you spend in these two areas to see if you're able to free up cash.

2. There's No Flexibility

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If you don't have any flexibility in your budget, you might crash and burn. When reaching a financial goal, many people create a strict budget for themselves. All their money goes toward bills and nothing else. This can work for a few weeks or a few months, but you run the risk of frugal burnout. Allow some wiggle room in your budget to blow off steam.

3. Out of Sight, out of Mind

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It's important to review your budget on a regular basis. If not, you might forget about you spending plan and start spending outside your budget. Once you have a financial plan for the month, keep it posted in plain sight. Also, regularly balance your checkbook and keep a record of receipts to make sure you're not overspending.

4. Your Expenses Exceed Your Income

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A budget won't work if you don't earn enough to support your lifestyle. In this case, you have bigger problems. Before a budget can work, you'll have to reduce expenses (or earn more money). You might have to take extreme measures, such as downsizing, getting rid of an expensive automobile, getting a roommate to share expenses, etc.

5. You Haven't Budgeted for Surprises

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Surprised costs are inevitable, so make sure there's room in your budget for incidentals. For example, a friend sets aside $25 from each paycheck for incidentals, such as a car repair, gifts, etc. She keeps this money in a separate bank account. And when a surprise expense occurs, she isn't caught off guard.

6. You're Not Putting Enough into Savings

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Budgeting for expenses is smart, but you also need to budget for saving, or else you'll never build your cash reserve. Money experts recommend at least a three-month cash reserve. How much do you have? Paying yourself first shouldn't be optional, it should be a priority. Your savings isn't going to grow itself.

7. You Don't Stick with It

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A budget only works if you're committed. You can't go back-and-forth and stick with a budget one week and ignore it the next week. If you're serious about improving your personal finances and living within your means, you need to commit and only spend what you can afford.

A budget is a helpful financial tool, but only if you know the right ways to budget. What else can ruin a budget?

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