7 Typical Budgeting Challenges To Overcome This Year

While you might think you are prepared to handle any obsticle there are still some budgeting challenges that you might have overcome this year.

Budgeting is a very important skill, and something that you can never stop improving on.

According to CNBC, 56% of Americans can’t cover a $1,000 emergency expense with savings.

That means just by reading this post and taking that first step into learning how to overcome your budgeting challenges, you already have a head start on most of the US population!

notebook open to a monthly budget spread

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Why Is Budgeting So Important?

Setting up a budget is one of the most important parts of beginning your financial journey as it creates a roadmap for your monetary wellness and lets you make informed decisions about your money.

A budget gives you a clear picture of your income, expenses, and savings, letting you divide up your resources effectively and reach your financial goals. It can also help you find spots where you can cut back on spending, lessen your debt, and save money for emergencies, big purchases, and retirement.

Eventually, continuing budgeting can teach you so many important life skills, like helping you avoid impulsive shopping and unneeded debt.

Understanding your finances gives you control over your money and reduces financial stress, while also letting you track your progress, make any changes you see fit, and create long-term plans for a secure future.

Overall, budgeting creates the foundation for eventual financial success, letting you live within your means, build wealth and achieve financial freedom.

Check out this post for more information on budgeting tips, and this post for help for beginners.  

7 Budgeting Challenges You Should Aim To Overcome This Year

1) Unexpected Expenses

Life happens and unexpected expenses can pop out of seemingly nowhere. They can seem impossible to overcome but with the right mindset and plan, you can navigate through these financial hurdles.

There are several strategies to help overcome unexpected expenses.

The first being to set up an emergency fund, by monthly putting aside some of your paycheck. You can think of this as a rainy day fund, and while it might seem useless, you’ll be thanking yourself the day any unexpected bill (such as hospital bills, vet bills, home repair) pops up. This acts as a safety net and can give you breathing room when unforeseen costs come up.

My second strategy would be to have a habit of tracking your expenses, and see where you can start cutting down. Living within your means lets you stretch more of your resources towards any unexpected financial situations.

A third strategy would be to look for other modes of income such as freelancing or part-time work, to add to your regular earnings and create additional financial stability.

Finally, try working with your creditors or the service provider as many places usually have payment plans, that can help lessen the overall amount and stress. 

Remember, being proactive, prepared, and adaptable are key to overcoming unexpected expenses. 

Stressed family couple received debt mortgage notification, checking financial documents

2) Being An Impulsive Buyer

The first step is to see what makes you buy, the emotion that is behind impulsively buying. For most people it is because they feel happy when buying new things.

To tackle this the most important thing is creating a clear end financial goal which you can reach by making a budget and sticking to it.

Before making any purchase stop and ask yourself if you really need this and if it fits with your budget and overall goal. Don’t buy that thing right away, give it a couple days and see if you still feel that you need to buy.

This gives you time to overcome that initial impulse and lets you evaluate your budget to see if it fits. Try and find healthier ways to make you happy like doing hobbies that make you happy.

Look for a community of people that are also budgeting, or that promote frugal living to help keep your mind on your budget and have support in reaching your goals.

Personally, I follow a lot of frugal promoting people on instagram and pinterest to keep me in the right frame of mind, be supported by people who are in the same situation as me, and to learn new tips and tricks to be on a budget. 

legs of a woman sitting on a white couch with shopping bags by ler legs

3) Not Having Clear Financial Goals

Setting financial goals can seem impossibly hard, but it is a very skill to reach financial freedom. The first step would be to evaluate your values, dreams, and end goals.

This could be something you’re taking to get like saving up to buy your own house, or something you are trying to overcome like credit card debt.

Creating a clear end goal helps you actually stick to your budget, since you have something to achieve.

Decide on specific, measurable, achievable, relevant, and time-bound (SMART) goals that fit with your values.

The next step is to break down these goals into actions you can follow like reducing the number of times you eat out in a week.

Create a budget to track your progress. Take time to review your goals and adjust with any changes you see you need to add.

Finally, look for financial resources, look for books about finances that interest you, check out social media accounts to look for more tips on how to achieve your financial goals. 

someone holding alot of cash with a notebook, credit card, coffee

4) Debt

Debt is becoming more and more a common problem for the everyday person. While it can seem impossible to tackle there are some steps I recommend when you are trying to overcome debt.

First it is important to face your debt head on and understand the full scope of how much you owe.

Create a budget that you can stick to and see where you can cut spending to free up more money to make your payments.

See if debt consolidation is an option for you and look for ways to potentially lower interest rates, or your monthly payments.

Once your budget is created and you still see that you need more money coming in, look for ways to have a side job.

This can be very hard and time consuming, but some easier options could be doing freelance work, part-time jobs, and work from home opportunities.

If you have multiple debts to pay off, create a priority list. Prioritize debts that have a higher-interest rate while making minimum payments on others.

Look towards professionals for help, seek support from credit counseling services, or social media financial experts to give you support.

While overcoming debt can see endless, if you stay motivated, track your progress, and stick with it, you will eventually be financially free. 

Related Reading: How The Debt Snowball Method Could Cost You

9 Habits Of Frugal People Who Stay Debt Free

How To Pay Off Debt Fast And Still Have A Life

5) Lack Of Savings

Everyone is talking of the importance of having savings, but no one says how hard it is to start, or how to overcome not having one in the first place. It’s never too late for you to start working towards financial security.

The first step is to create realistic goals with steps to follow.

Next, see areas where you can cut on spending and eliminate unnecessary spending. Make a budget that focuses on saving and make sure to stick to it.

Create an automatic savings by setting up automatic transfer from your paycheck to a separate savings account. This avoids any temptation to put less into your savings.

If you feel that your income is not enough to finance a savings look for other streams of cash flow, like freelancing or work from home jobs.

The most important part is to stay motivated. Remember why you started and focus on reaching your goals.

When you feel down remember that any small work helps, some months might be harder than others but in the end with perseverance you can overcome any challenge and build a good financial foundation.

Related Reading: What’s The Point Of Having A Savings Account These Days?

12 Frugal Living Tips With A Big Impact To Supercharge Savings

Ways To Plan For The Future With Your Finances

6) Not Consistently Budgeting

Consistently budgeting is really hard for everyone to stick to, but it is a very important skill to master.

The first step is to begin by evaluating your financial situation and understanding how important budgeting is in your life. Once that is settled, mentally keep budgeting as a priority in all situations.

Create a monthly habit of taking some time to review your finances, and update your budget. Use this time to see how much you are spending, see if there are any areas where you can cut down. Try and see a pattern of your spending habits so you know areas to improve on.

This really helps when you are trying to cut down on excess spending.

To help organize everything, try using budgeting tools such as online templates that make it easy to follow your budget.

Check out my templates here.

Keep up your motivation by focusing on your end goal. Remember, small steps can still help you make a lot of financial progress, the important part is to keep working on your budget. 

7) Irregular Income

Having an irregular income can cause you a lot of stress, especially when it comes to managing your finances but getting on track isn’t  impossible.

The first step is to sit down and create a basic budget, showing all expenses that are essential monthly expenses. List down the minimum cost to cover all these expenses.

Next, after you see how much your necessities cost, start portioning some of your paycheck to an emergency fund.

This changes month to month but especially on months that you are earning more, try and add more into this emergency fund. This lets you still have money to cover your basics in months when your income is really low.

Additionally, look for other streams of income such as part-time jobs, work from home or freelance work.

Create a financial plan that you can easily adjust to based on your income for that month. Using a budget tracker can really help you see areas where you can cut on expenses.

Look into frugal living to help stretch your money, and overcome any money trouble, even more. Social media accounts can offer a lot of great free advice to learn more ways to stabilize your income.

Overall, following a plan, and prioritizing on your emergency fund will help you overcome the challenge of an irregular income. 

spreadsheet of finances

What Can I Do To Tackle These Budgeting Challenges?

Overcoming budgeting challenges, while challenging is not impossible. Build an emergency fund to be prepared for unexpected expenses.

Avoid impulsive buying by thinking through all your expenses and focusing on the long-term effect the purchase has on your goals.

Create clear financial goals that agree with your values and what your end goal is. This will help give you motivation to keep going.

Tackle your debt by establishing a plan focusing on paying off high interest debts first. Your budget should prioritize saving, and involve your income and monthly expenses.

Embrace flexibility in your monthly budget, adjusting and prioritizing essential expenses when you have an irregular income.

In the end, look for more advice and tips through joining a support group like online communities that talk on frugal living, financial advice and budgeting.

Overall, every small step towards working on your financial goals, really will help you in the end. With determination and discipline, you can reach your end goal and overcome any budgeting challenges.  

Come and follow me on Pinterest for more money saving hints and frugal tips!

Last Updated on 6th September 2023 by Emma

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