“Use a budget planner/spreadsheet” appears to be one of the go-to recommendations in articles about how to save money, including on ASIC’s Money Smart website.
There are two main reasons this advice won’t turn an over spender into a saver.
1. What but not How
A budget spreadsheet defines what you can afford. It’s like setting a goal, in that it has aspiration but no action.
The trouble is that is where most people stop because that’s often where the advice stops.
To achieve your goals you need a budgeting system that defines HOW to achieve the goal. Without the how you’re unlikely to stick to the budget, especially surrounded with abundant temptation.
Your budgeting system needs to be personalised to the actions that suit your situation and personality, just like a diet or exercise program.
To discover 10 key elements of a stickable budgeting system read my mini-guide.
2. Too short-sighted
Most free category-based budgeting spreadsheets are flawed in that they are too focussed on the present and don’t prompt you to set aside money for predictable expenses that are two or more years away.
It is those predictable expenses that will lead you to dip into your savings, or worse, to borrow to fund them.
So, if you just use one of the many free budget planner spreadsheets you probably won’t make it beyond living year-to-year.
To truly define what is affordable you need a budget planner that looks over the horizon. I share the structure of one here.
For help in building a personalised budgeting system incorporating a better budget planner contact me.