7. No way of measuring success.
There is nothing more frustrating than worrying that you might be headed for money trouble but not really being sure if you are or not.
In this situation, every financial decision you make has an element of fear and maybe even some guilt attached to it. People’s budgets fail them when they do not know clearly what success looks like and what failure looks like.
It is impossible to make accurate financial decisions if you don’t know if you are on track or off track; if you don’t know when you are ahead or behind. You end up guessing what you can afford and what you can’t afford and ‘Reason for Failure Number 4’ already referred to how bad that is.
I will give you some clues so you know what success might look like.
1. All your predictable bills paid on time
2. Never Run out of Money
3. Have your budget plan cost you as little as possible
4. Never have more money tied up for paying bills than is necessary.
5. Know when your worst day of the financial year is and have a target bank balance that you plan to hit on that day.
6. Know your bank balance targets between today and that day so you know when you are succeeding and when you are not!
Sound simple? It is!
The guy who crashes into a guidepost after falling asleep at the wheel at 2am was actually heading for trouble when he was getting drowsy at midnight and chose not to stop. All the signs were there and he ignored them.
The guy who could not pay his rates, electricity and registration bills because they all fell due in the same week was heading for a crash months before, but he didn’t know he was off track with his money until the day he ran out of it.
Knowing what success looked like would have been as simple as knowing what his bank balances needed to be each day leading up to the week all the bills were due.
So far I have given you 7 reasons why budgets fail and they all get solved from using my Simply Budgets software to create a budget plan. I had no idea when I was creating the software that it would solve so many problems!
If you feel like you would benefit greatly from not having to guess what you can afford and you would love to know when you are succeeding, look no further than http://simplybudgets.com.au/simplybudgets/
If you already have this covered give yourself a big tick for number 7!