Budgeting isn’t most people’s favorite pass-time, but it is necessary.
If you are going to create a budget that works for you, keep in mind you may find yourself making adjustments more frequently than you thought. That is not only ok, but entirely normal.
Even still, there are 7 budgeting mistakes that could hurt your finances if you don’t look out for them.
1. Being Too Rigid With Wants
Sometimes you have to give a little when you are trying to stick to a budget.
For example, you might be used to trading in your car for a new one every two to three years. However, it is far better on your budget to keep your car longer before trading it in on a newer model. You have to find a compromise between what you want and what you need when you are sticking to a budget.
2. Making Your Budget Too Strict
It’s easy to say you won’t eat out or spend any extra on entertainment so you can stick to a tight budget. Of course, it isn’t always as easy to put your money where your mouth is. If you don’t leave yourself a little bit of wiggle room in your budget you may go off the deep end and chuck your budget altogether or decide it isn’t worth it.
3. Not Searching for Other Options
Maybe you like to go out every Friday night and feel you can’t give it up, because your friends will expect you to go with them. Try letting them know you want to go out, but would love to try something new. They don’t have to know you are really searching for a cheaper alternative.
4. Neglecting to Save for a Rainy Day
You can’t possibly plan and budget for everything that is going to come up in your life. It simply isn’t possible. What you can do, though, is set some money aside for emergencies and unforeseen events. It may take a while for you to build up an emergency account and how much you should save depends on your comfort level.
5. Overlooking Bills That Are Not Monthly
Nearly everyone has bills to pay that happen only periodically instead of monthly. For instance you most likely aren’t going to go to the dentist or eye doctor every month.
You can and should still include these in your monthly budget, just divide your estimated expenses by twelve and set that money aside until you go to your appointment.
6. Underestimating Bills that Fluctuate
Most people have some bills that change from month to month. One example is your water bill. If you own a home and water the lawn in the summer months, it will probably be a little higher than in the winter months. You need to account for that in your monthly budget.
7. Forgetting About Payroll Deductions
The amount you get paid isn’t what you have available to budget for. There are deductions that are going to come out of your check before you receive it, such as taxes, health insurance, and retirement contributions to name a few. Don’t forget about these when you are budgeting because otherwise it could hurt your finances.
Budgeting isn’t fun, but remembering these budgeting mistakes can make it go a lot smoother.
Have you experienced some of these budgeting mistakes? Did they harm your finances?- Kayla