Budgeting can be hard! Wait, let me clarify that; making a budget is fairly simple, sticking to that budget is hard. It’s so easy to make mistakes with your budget and unfortunately those mistakes can be incredibly hard to erase. Once you’ve made them, you’ve dug yourself into a hole that for some families, they never climb out of. Take a look at these 5 common budgeting mistakes and then go double check your budget to see if you’re making any of them.
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1. You Are Not Tracking Expenses – For some people, tracking their expenses is just a part of their daily routine, but for others it’s a rare occurrence. Not tracking your expenses is one sure fire way to set your budget in a downward spiral. Why? Because if you’re not tracking your expenses, you have no real clue where your money is going. Although tracking is important…tracking is not the same as budgeting! So don’t get the two confused.
2. You Are Not Budgeting All Expenses – Have you ever forgotten to add something to your budget? Little expenses, expenses that crop up yearly or every other month, and even expenses for things that haven’t happened yet (your water heater is old so you know it’s going to have to be replaced in the future). Those times that you don’t have those amounts budgeted can cost you hundreds, maybe even thousands over the course of a year depending on how often you do it. They can result in you having to take money out of your savings, overdraft fees, or having to use a credit card. Be absolutely certain that you’re adding every expense you have into your budget…even the little nickel and dime ones.
3. You Are Not budgeting Down to the Last Penny – There is a reason that most financial gurus will tell you to plan your budget down to the very last penny. It’s because if you have money that isn’t budgeted, you’ll spend it. Plain and simple. Your mind thinks that because it’s not on the budget that it must be okay to spend. By adding in every single penny you make, even if it’s just budgeting it to go to savings, you create that thought process that the money, even that extra, has a place it has to go.
4. You Have a “pass me by” budget – What do I mean by “pass me by?” Exactly what I said. Budgets are something that have to be checked. They have to be updated. They have to be played with. If you’re creating your budget at the beginning of the month, but not looking at it again until the next month (passing it by)? You’re going to end up way off track and not even know it!
5. You Are Not Having A Monthly Financial Meeting – One final word about budgets…they are constantly in a state of change. They’re never the same from month to month and depending on your income and expenses, they can change even quicker than that. Each month when you sit down to do your budget, make sure that the expenses and the income are updated. That way, if things have changed, you’ll know and be one step ahead of any trouble those changes might cause.
Now that I’ve explained, take a look at your own budget. Are you making any of these common budgeting mistakes? If so, fix them soon before you end up in the hole!
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