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Common Budget Mistakes to Avoid
A good budget is a pillar of financial success, but starting out can be hard and many people struggle with their budget. Here are some common mistakes that stop you from fully realising your financial potential.
You’re putting it off – Once you ahve decided you need to make a change, do it. Putting it off just means you’ll be in trouble for longer. Once you have a budget you are ready to work with set a date and start going. Remember it might take you a while to settle in and most new budgets need a little adjustment. Don’t give up after one month.
You didn’t keep track – Writing a budget is a great first step, but if you don’t keep track of your spending and compare it with what you budgeted then it isn’t helping you. Whether you carry a notebook and write down ALL of your purchases or you download a budget app to your phone you need to pay attention to where your money is going.
You forgot to include some costs –Your first attempt is likely to have flaws. Many people forget to include non-monthly costs, like your yearly car insurance payment. Try to factor it in as a monthly expense and put that money aside so you have it when you need it.
You haven’t adjusted it – Once you start to actively pay attention to your spending you may realise that your initial budget needs a little tweaking. This is ok. There is little point trying to stick to a budget that was built on incomplete information, so if you realise your travel costs are more than you thought, and there is no way to cut them down, then adjust accordingly. Be sure to review your budget every few months and alter it to fit the changes in your life when necessary.
You’re being hard on yourself – Learning to budget is a process. Don’t beat yourself up or get discourage if you end up over budget. Try and look at the places you are over budget, ask yourself why, and identify ways to change that.
Your expenses outweigh your income – This one is the most frustrating and requires the most effort to fix. Generally attempting to scale back on expenses is the place to start. Look for places where you can save, like cycling to work instead of taking the bus. Look at which expenses are causing the biggest problems. If your rent is too high could you move to a less desirable area or consider renting with a roommate?
If it is debt payments that are making you over budget then you may want to consider wasy to eliminate that debt or lower the payments. You can contact us here www.cecraig.com to arrange a free debt consultation.