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10 Common Budgeting Mistakes

August 31, 2018

 

Building a successful budget does not have to be a daunting task that is all business and no fun. When done right, you will have a better idea of where your money is going, and clarity for where you want your money to take you into the future. Here are a few common budgeting mistakes people are making that cause them to fear creating a budget in the first place.

 

  1. Not having one
    Failing to set limits for yourself creates disaster in the future, if you intend to purchase or make large purchases like a car or appliances.
  2. No emergency fund
    Having an emergency fund is essential for everyone. Setting aside at least $1000 (to start) puts you in a smart situation in case an unexpected emergency occurs.
  3. Guessing at your monthly expenses
    Throwing numbers at your budget is a lazy way of creating a budget. Look over your last few months of spending to get a clear idea of what you are spending each month, and that can determine what you should set your monthly budget.
  4. Not tracking your spending
    Tracking your spending has never been so easy! There are now mobile apps available from third parties, your credit card companies and even your local bank! Create alerts so you are aware of what you are spending and how much you need to spend each month without going into a hole.
  5. Forgetting about savings
    Do you care about retiring some day? Creating a solid savings plan whether it be for retirement, or large purchases is essential to any budget. Setting up an automatic deposit into your savings account is a great way to save without thinking about it.
  6. Leaving out items
    Like we mentioned before with guessing your expenses, leaving out items like gifts, unexpected purchases, vehicle maintenance, etc. is a great way to over or underestimate your budget.
  7. No money for fun
    Don't forget to have fun! Give yourself a break and it is OKAY to leave a portion of your monthly income for discrectionary income, and go to a movie every once in a while!
  8. Label needs as wants
    Sometimes we can confuse what we really want with what we need. You don't HAVE to have that new pair of shoes right away. It might be a good idea to make a list of what you want versus what you need on a monthly basis. It could help you budget in the long run.
  9. Not working as a team
    Whether you are married, or living with a roommate or family, it is important to seek help if you are confused or frustrated. Money is a common cause of conflict, so talking your budget and income out with your partner is a healthy way to be!
  10. Assuming your monthly bills are set
    Do you rent or own your home or live in an apartment? Based on your utilities usage, your bills might be different each month. Do you pay for cable or use a streaming service? Taking these fluctuating services into account will make a difference when creating a budget.
     

 

 

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