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3 Common Budgeting Challenges to Overcome

Personal debt in the U.S. is soaring. In the last quarter of 2018, the Federal Reserve’s data revealed that collective personal debt tops $4 trillion dollars in America for the first time ever, and has grown to over $4.5 trillion as of June 2022. One of the recommended ways to pay down debt is to make a financial plan and then stick to it.

“In two decades as a financial professional, I can’t tell you how many people tell me, ‘I know debt is a huge problem in this country, but I thought I could handle it,'” states Howard Dvorkin, CPA and chair of, in a 2019 press release, after the company released its annual survey on budgeting.

“It’s human nature to expect the best and not plan for the worst, so many otherwise smart Americans refuse to budget–because they don’t think they need it. Then a serious illness or accident keeps them out of work. Or they simply get laid off. Or they get divorced,” he states. “Or a natural disaster strikes. That’s when all those years of budgeting help you weather the storm.”

Key Takeaways

  • Making and maintaining a budget plan can help pave the way for a healthy financial future.
  • Perfect is definitely the enemy of the good—don’t feel you have to track every single penny if that is overwhelming.
  • Keeping track of what you plan to spend vs. what you actually spend each month can help you adjust your budget.
  • Budgeting apps or software programs can be useful tools for tracking expenditures.

The “budget” has been known to make people cringe, cry, and bury their heads in the sand, but budgeting challenges don’t have to keep you from getting the job done. Budgets are just a set of guidelines to help you manage your money. Once you set up your system, budgeting isn’t even that much work. If yours isn’t working for you, then scrap it and start again. But don’t be stopped before you start by challenges that you can easily overcome. 

Challenge #1: The All-or-Nothing Mentality

Many people are turned off by budgeting because most advice about creating one requires tracking every penny spent for three months. That is a lot of saving receipts and tracking, especially if you aren’t using an automatic system. The point of a budget is to get a picture of your expenses and plan for your financial goals—in other words, it is a tool for you and you alone—and if tracking every penny is a roadblock to getting you started, cut yourself some slack.

Having a general idea of your income and major expenses is a good first step toward creating a budget. Common spending categories include:

  • Rent
  • Utilities
  • Phone/Internet
  • Transportation
  • Insurance
  • Groceries
  • Car Payments
  • Childcare
  • Loans or Debts
  • Clothing
  • Entertainment
  • Dining Out
  • Travel
  • Charity
  • Savings 

If you tally up roughly what you spend for each of these categories (or what you would like to spend)—and it is less than your income—then it is fine to track your large expense categories and leave out the occasional lunch or impulse purchase. If you find that you’re overspending, you need to reassess and set a stricter budget.

Some experts suggest not using credit cards when you are on a budget unless you are able to pay off the full balance each month.

Challenge #2: Labor-Intensive Tracking

As mentioned above, common budgeting advice requires you to track all of your receipts and spending for multiple months. You can do this on paper or on a spreadsheet, but there are easier ways. A variety of apps and computer programs exist that will track your spending, categorize it, help you create a budget, note progress toward your financial goals.

In different ways, these apps monitor your bank accounts, credit card transactions, and even investments and retirement planning. Some also allow you to set spending goals.

Challenge #3: Paying in Cash 

It has been proven that people who use cash rather than credit spend less overall. The big hurdle is that spending cash makes sticking to a tight budget very challenging because to track your spending you have to manually tally up receipts. There are a few ways to stick to a budget while avoiding credit cards.

One method is known as the “envelope” method. You take your spending money out of the bank at the start of the month and divide it into envelopes. When the grocery envelope is empty, that’s it for the month (although you can always borrow from the other envelopes in an emergency). A more wallet-friendly alternative to carrying around multiple envelopes is to paper clip bills together and attach a sticky note that designates what the money is for. Obviously, some monthly bills will be paid directly from your bank account—or by check, if you still do that—for example, rent, car payments, credit cards, and utilities.

A less complicated version of this method requires designating a specific cash amount for variable expenses and miscellaneous purchases and putting that in a single place. Instead of tracking every cup of coffee or dinner out, use your cash on hand to guide your general spending. The fund can be designed for whatever time period works best for you: weekly, biweekly, or monthly. Just coordinate it with the big monthly bills. This second approach could also work with a debit card if you carefully track what you spend.

The Bottom Line

Budgeting can seem scary, labor-intensive, and challenging, especially for those who use cash. The most important thing to remember is that it is a tool for you, and if you go awry one month, you can just try again the next. And don’t be afraid to change your budget if it isn’t working. Use the above tips and you should be well on your way to finding a financial plan that fits your lifestyle.

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