How to Fix Your Budget and Make It Work

February 4, 2021

Are you looking for ways you can fix your budget and make it work?


In today’s post I will be sharing action items you can do to fix your budget and make it work this 2021. If you’ve been budgeting for some time now but still feel stressed because nothing seems to be working, then this post will be your best friend.


Creating a budget is important.


It acts as a blue print of your financial life, giving you a clear outline on your current money status.


But let’s all be honest that not everyone succeeds when it comes to budgeting.


Not even me.


I have been honest on my love and hate relationship with budgeting through the years, and I thought it will be nice to share to you some helpful tips on how to fix your budget and make it work this year.




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What is Budgeting and Why is it Important?

A budget works as a basic plan on how you will spend your money in a given period of time, mostly monthly-based. Budget gives a top-view on how much money is coming in and how much is going out.


Related read: Top 10 Frequently Asked Questions about Budgeting


A budget gives the following advantage to a person:


It gives you control over your finances


One of the best benefit of keeping a budget is that it shows your where your money goes.


Dave Ramsey says it best, “A budget is telling your money where to go, instead of wondering where it went.”


I think that quote speaks volume on the importance of budgeting.


  • You budget because it gives you a clear picture on where your hard-earned money will and should go.
  • You budget to have an idea on your regular expenses like utility bills, rent, transportation and meal allowance.
  • You budget so you can recall how much you spend on a certain month and whether you overspend or not.


Without a budget, you will always feel robbed after payday wondering where it went.


It clarifies your good and bad spending habits

A budget will also let you know what kind of person you are when it comes to handling your money. Are you more of a saver, spender or a mix of two?


If you are a saver, you feel utmost satisfaction in seeing your money grow in the bank and you easily feel guilty for every big (unwanted) purchases.

If you are a spender, you are prone in buying impulsively and making excuses/justification in for every big (unwanted) purchases.


Having a budget will give you full understanding why you keep on doing the same thing on your money. It can also lead you to change your bad money habits and achieve your financial goals.


It teaches you to live below your means

Because you are following a spending plan it is much easier for you to live within your means.


You won’t be easily influenced to overuse your credit cards or overspend on your wants. You’ll find contentment on your financial life and easily deal and adjust in case something is going wrong.


It helps you reach your personal and financial goals

Last week I have shared to you my personal and financial goals for 2021.


Now one way I’m making sure that I stay on track of my goals this New Year is having a budget. I always include in my budget how much I will be spending on my needs, my savings and investments and my wants.


Without having a budget you will probably just waste your money on the unimportant things. Making a budget on the other hand will lead you to the opposite. Ever since I started funding these three areas I feel more secured to invest and to make big financial decisions.



Common Budget Mistakes and How to Fix Them

It takes a lot of patience and practice to master the art of budgeting.


You may remember my two-part post on Things that Ruin my Budget and Maybe Yours too. I did that about two years ago and up until today those things are on top of the reasons why I can’t seem to make my budget work.


But of course I can pretty much say that I have matured over time.


Thinking about my goals, making necessary adjustments and sticking to my budget proved to be some of the best money tips ever. Below are the common budget mistakes we all seem to commit and possible solution on how to fix it this 2021.

Problem #1. My budget doesn’t work at all

I think it is a very common scenario that we follow a certain budget technique or template but end up not sticking to it. It became more like a wish list of how you want your money to be distributed rather than an actual spending plan that works.


How to fix it:

Budget should be personal. You may find a ton of guides and printables online but without practicing and giving a few months to test you’ll definitely end up failing.


For me budgeting using pen and paper works best.


Some will find comfort on downloadable personal finance apps instead. These apps are free to get and you can use them whenever or wherever you are. It is only you who can make your budget work for you and I sincerely hope that that statement makes sense.


There are also a lot of free budget spreadsheets you can use available online.


Problem #2. My budget is too restricting

The lack of area to make necessary adjustments to your budget will also end up as a big mistake. Your budget should be flexible enough to keep you from going downhill and getting bored. It should have room for mistakes and be as forgiving as it is to set you on good financial start.


How to fix it:

One of the best way to fix this is to divide your money into three categories – Needs, Savings and Investments, and Wants. I find this to be the ultimate solution in my own personal finance journey.


Needs or Essential Expenses are your needs or non-negotiable. It includes your rent, food, transportation, education etc.


Savings and Investments or Financial Goals are your savings and investments. It includes your contribution to your retirement, emergency fund and your big life purchases like house, car and vacation.


Wants or Lifestyle are your wants and recreations. It includes your gym membership, your monthly cable fee, your internet plan, your hobbies and your personal care allowance. Any other miscellaneous expenses goes to this bucket.


The right balance between this three will help you create a budget that works. You can follow my suggested 50-20-30 Rule or change it to 70-10-20 or 80-10-10. It is all up to you.


So once your income comes in all you have to do is distribute your money on the following buckets:

50% will go to your essentials

20% will go to your savings and investments

30% will go to your lifestyle

Problem #3. My budget lacks of fund/money

Now most of people long to create a budget but will always feel the pressure of not having enough money.


Living paycheck to paycheck is a sad reality to many of us. I have been to this state before and its something I will never wish to come back at all.


How to fix it:

Prioritize your debts

Debt management should be the first in your priority as always. Cut back as many items on your budget categories and put all the money to pay your debts. I have a ton of debt-management articles you can read for more information.


Ask for a raise

Not having enough money to cover your expenses only means your income is too low already. Learn to negotiate your salary once and for all. If you know that you deserve higher salary then why not talk to your manager or supervisor for a raise.


Read next: How to Get a Major Major Salary Increase Increase your income


Having part-time jobs or freelance job will help you big time to make the gap between your expenses and spending smaller. I have mentioned a ton of side hustles you can try to increase the money you are getting.


Related reads:

2020 Side Hustle Income Report

7 Side Hustles I Did to Make Extra Php 5000 a month

8 Important Reasons to Start a Side Hustle




How to really Make Your Budget Work For You

Make it realistic

Always build a budget out of real and actual numbers. Put the real income you get in a payday, the real expenses you usually spend on your budget categories and the real magic numbers you have in your saving goals. Make your budget as close to your real life spending as possible.


Do it regularly

Setting regular budget from monthly, weekly to daily will definitely make you more knowledgeable in your own personal cash flow. Don’t stop with just a monthly budget but add a weekly spending plan to further breakdown your expenses. Also try tracking your expenses on a daily basis to see whether you live within your means.


Review it as often as you can

This is the part that can make or break any budget. Doing regular reviews of your budget is essential to keep yourself updated on your spending habits as well as whether you are acing your financial goals. Reflect on how your money went from the past month or past week and find out possible solutions to make it better.


Final Note from SavingsPinay

Knowing how to create a budget will definitely change your life for the better.


It is the most important step in building a solid financial foundation. Take your time in creating a budget that works for you. Make sure that you have defined all your budget categories.


In case this is your first time to create a budget I suggest reading this post.


How are your budgeting this 2021?



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Clariza Glino

Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at izza@savingspinay.ph


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