Your top 5 budgeting mistakes and how to avoid them
Budgeting your money is one of the best financial decisions you can make, but even the most well-thought-out budgets can have pitfalls. Here are five of the biggest budget mistakes and how to avoid them.
- Not writing down your expenses. When it comes to sticking to your budget, it's of the utmost importance that you have current, accurate knowledge of how much you are spending.
- Solution: Track your outgoing cash (purchases and bills), by checking your bank account history using Online Banking, or keep receipts to ensure you are always aware of what's coming out of your account.
- Incorrect account of spending. If you're estimating your spending, but aren't exactly sure how much you've spent, you could be putting your budget in danger. Having an inaccurate account of how much money you've spent could sway you to think you have room to spend more than you actually can afford.
- Impulse buying. The age-old enemy of your wallet is the impulse buy. Whether it be the hotdog stand outside your office, a new pair of shoes that are on sale, or a multitude of other things, everyone has fallen victim to this wallet villain at some point.
- Solution: If you know that you're an impulse buyer, allot extra money in your budget for such purchases. Don't allow yourself to go overboard, but having money set aside for extra things allows you to feel like you can still enjoy your life, while keeping your budget on track.
- Keeping up with friends. Sometimes it can be hard to stay on track with your budget if you have friends that are constantly eating at restaurants, going out at night, or making last-minute spending decisions. You want to save your money, but you also don't want to be left out of all of the fun. What are you supposed to do?
- Solution: Communicate your wallet concerns with your friends. If they truly care about you and your needs, they'll understand and will compromise here and there. Also, suggest doing something that's more in your price range - a weekend BBQ can be much cheaper and you can spend quality time with your friends.
- No wiggle room. When you're planning your budget, make sure that you are setting thresholds that are realistic. If you make a budget that doesn't allow you a little wiggle room, you'll either end up over indulging or limit your experiences.
- Solution: Make a plan that you know you can follow. Put enough money aside for bills and savings, but also allot extra for little things you'll want throughout the month. Understanding your spending habits and basing a plan off of them will make it much easier to stay on track with your budget.
Budgeting definitely isn't easy, however, it's essential to a healthy financial future. Keep these mistakes in mind, so that you can stick to your budget and maybe even add some extra cushioning to your savings account.
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