- Guest Contributor
- June 23, 2022
If you want to get your finances into shape, the advice you’ll hear most is, “Make a strict budget and stick to it.” While definitely well-meaning, this quick tip does not always work out as intended. Sometimes, building a strict budget is simply a bad idea. Here’s a look at just how it can backfire on you.
Irregular Income Can Throw a Wrench in the Works
As a gig worker, it’s pretty common to have your income follow a feast-or-famine pattern. Unless you’re saving money like mad during the feast periods, lower income months can make it pretty hard to stay on a strict budget.
You may then find yourself falling off course more often than not, decimating your efforts to get control over your finances. The resulting money mistakes can catch up with you fast, too, which only serves to keep you playing catch up forevermore.
A Restrictive Financial Mindset Could Derail Your Efforts
A positive financial mindset is everything when it comes to improving all your money matters. How you think and feel about money influences everything from controlling your spending to socking away funds for a rainy day.
Consistently following a strict budget can put a pessimistic spin on your mindset, however, especially if you never treat yourself to the little extras in life. You may end up losing your motivation as a result, causing you to go off track and ruin all the progress you made.
The Routine Could Keep You from Thinking Outside the Box
While following a strict budget, you simply go down each line item, making payments on time and in full. Although that definitely lets you avoid falling late on payments, it doesn’t encourage you to think outside the box in minimizing expenses.
You might miss out on opportunities to cut the fat by negotiating with your bill collectors, for example. Or you may not explore chances to switch out one service for another, which could otherwise save you big bucks each month.
So, What are You Supposed to Do?
If you find that sticking with a strict budget doesn’t have the intended effect, it’s time to scrap it. Strict budgets are not for everyone, after all. Instead, you could use zero-based budgeting to give every last dollar a job.
You’ll just need to use the 50/30/20 guideline to get started. To do that, allocate 50% of your earnings toward needs, and then earmark 30% for wants. The remaining 20% applies to debt repayment and/or savings. Then, adjust your approach based on what you earned that month.
Just don’t forget to renegotiate your regular bills and look for other ways to cut excess spending. Otherwise, you could still end up leaving money on the table every month.
By taking that approach, you can better manage your money without issues when your income fluctuates. And you’ll avoid getting burned out on sticking with the same old approach month after month.
Ready to Get Started?
About the Author: Marie Abendroth is a skilled content strategist and SEO copywriter who has been a proud part of the gig economy for over 10 years. In her articles, she aims to provide up-to-date info that can help everyone achieve their goals as an independent worker. You can find her on WritersAccess.
