Human Beings are irrational creatures. We can get ourselves in trouble at the drop of a hat if we stop paying attention. So as with our money, most of the population stinks at being financially successful. I propose, we are wired to fail.
Traditional economics teaches that humans are rational people who make decisions in ways that maximize their well-being. Their text books state that if person A does action B result C will occur. People don't function in logical ways, as if they were math formulas. In truth, people have emotional and biased behaviors that generally run them into the ditch. If you don't believe that just read the daily paper or observe the people in your circle and tell me how they can so easily muck things up.
An example of this faulty wiring is a persons emotional behavior when using credit cards. When a credit card is used to purchase items their is no immediate consequences, yet there is an immediate gratification. Plucking actual dollars from your pile of cash is more painful, and leads you to spend less. It's your wiring that produces those resulting emotions. You have no control over those feelings, yet you do have control over which actions you take. Choosing the right behavior will cause you to be financially successful.
Budgeting is another way we bring out the human actions that lead to failure. With all good intentions we create a masterpiece of a budget. We have made up our minds to be organized and before us is the blueprint. By definition, your wired to not succeed, there is no way because humans are notoriously poor at following through with their plans.
The Robert Burns poem said it best,"The best laid schemes of mice and men, often go awry". It's not your fault, you are wired that way. Recall when you went on a diet, we often fail at both for the same reasons: too much focus on the restrictions, not enough on fun. So it’s not surprising when people end up bingeing later, financially and food wise, more than making up for dollars not spent or calories not consumed. You have to fight these responses and make a budget that's not so restrictive. Instead make a "spending plan" that has outlets for a little distractions to satisfy the beast within.
We have it within us to overcome this wiring problem. We have self control and it is the only way to go on.
The tools we can use to have this self control is a notebook, spreadsheet, or website like Mint.com. List all your monthly spending and be conscious of it. Next give your plan a purpose or goal. Budgets with a goal, like a vacation or a home purchase tend to be more successful.
Your goal setting and positive motivation will help you succeed. Your daily battle to keep bad behaviors in check will continue. It's up to you if you want to win at your money.