It is the awful “B” word again—Budgeting. Most of us don’t even want to do a budget. It is frustrating, boring, and makes you feel controlled. Even if you have tried a budget you make have failed to stick to it, so why bother. If you have tried to budget and failed or are new to budgeting, here are some common budgeting mistakes to avoid.
- Locking yourself into a monthly budget when you don’t get paid monthly. Don’t think your budget has to be a monthly budget. If you get paid every week, do a weekly budget. Just remember to save weekly for monthly expenses. For example, if your rent is $400.00, you would need to budget $100.00 every week to make the monthly payment.
- Not planning for expenses that only happen a few times a year. Some bills only happen a couple of times a year like property taxes, car insurance, Christmas presents, or haircuts. You should still set money aside every month for those expenses.
- Not setting money aside for unexpected expenses. You will have to go to the doctor someday and your car will need new tires someday and the kids will need back to school clothes someday. Make these expenses a category in your budget and set some money aside for them every month even if it is just $10.00 a month.
- Not reviewing your old budget when it is time to start the next one. It is important to review how well you did on your old budget before you start the next budget cycle. Did you underestimate food (we all do the first few budgets)? Did you overestimate medicines?
- Not having a general savings account that you add to every month. People will put savings at the end of their budget and just put money in there if any is left over. Guess what? Very little money will be left over. You need to put savings at the top of your budget and set a number to it and then do your budget. You might only be able to put $100.00 in it. Well, that is $100.00 more than you might be doing now, so congratulations.
- Not having an emergency fund. You have to have some cushion built up to help you plan. What if you were hurt and had to go on leave without pay at work for three months? How would you survive? Having an emergency fund helps you plan for those possibilities.
- Not budgeting the small things that add up. Little things that don’t cost much can add up over time. My budget has an Itunes category and I can spend $5.00 on songs each month. I also have a movies category where I save $10.00 every month for the couple of movies we see in the theater a year as a family. Consider eating out as a separate category.
- Not adapting. Just because you normally spend $100.00 on eating out a month doesn’t mean that one month you can’t cut that and use the leftover money to buy a new dress. You don’t have to use the same budget over and over every time. Also, if the budget didn’t work one month, change it the next month to make it work for you. This is your tool.
- Not writing your budget down. You can’t just do a budget in your head and expect that to work. You need to schedule a meeting with your family to discuss and write down the family budget.
- Not allowing for fun. Your budget isn’t about taking all the fun out of your life. It is about making choices to suit your life. It is about controlling your money instead of letting it control you. You should know how it is spent and have freedom to spend it guilt free.
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