Congratulations, you’ve got a budget in place (click here if you don’t), but now you’re in trouble. Something just isn’t working and your budget is busted. You’ve just made an epic budgeting mistake.
You’re not alone. We’ve all done it. Now learn and try to avid the same mistake again. If you can avoid these common budgeting mistakes you’ll be ahead of the pack.
10 Epic Budgeting Mistakes
1. Gas and Food- You are just getting a handle of how much you spend in these necessary categories. You’ve got to eat and get to work, so put a little extra in these categories in the first few months.
2. Not Tracking Expenses- Making a budget is only 1/2 of it. Now you’ve got to track those numbers. Don’t rely on your online bank statements for this as it won’t tell you which bills are due, what checks are outstanding, and pending transactions won’t show up on MINT. There are tons of ways to do this yourself. Pen and paper, excel, envelope systems, personal finance software like iBank 4, You Need A Budget (YNAB), or Quicken (affiliate links). Find what works for you and track your spending.
3. Forgetting Annual Expenses- Every year there are certain expenses you’ll need to pay like memberships, school clothes, christmas gifts, insurance premiums, etc. When you first begin budgeting you have to remember about these annual expenses, but most likely you’ll forget some important items. Example: Save $50 each month so you’ll have $600 in December to buy those christmas gifts.
4. Not Having an Emergency Fund- Unexpected events and expenses occur. An emergency fund of at least $1000 will protect you from an epic budgeting mistake and shield you from going into debt.
5. The ATM Monster Ate my Budget- You can $20 your budget to death and you have no idea where you spent it. Have a plan for how much cash you’ll get out each month and stick to it. You just might have to tell burger and fries it’ll have to wait till next month.
6. Being inflexible- Some months you just have to be flexible with your budget. Making a budget is more of like art than a science (especially with an irregular budget). Be flexible and willing to change, just make sure your budget balances. If you spend more in category, you’ll have to spend less in another.
7. Unrealistic with your Spending– $100 worth of groceries won’t feed a family of four, even if you are an ulta-coupon saver. Be realistic in how much you’ll spend.
8. Not Having Fun- You need to blow some money or you’ll sabotage your entire budget. A bit of mad money in your budget allows some steam to seep out. Have absolutely $0 in fun money for a few months and you’ll likely go crazy and make a large purchase or go on a spending spree. It can happen. Have an amount of money each month where you spend anyway and anyhow you want. Your spouse doesn’t even get a vote on this money.
9. Trying to Budget Without your Spouse on Board– This just won’t work. One will be frustrated and the other will feel controlled. Get on the same page with your spouse before you begin budgeting. Read more about budgeting for couples.
10. Saying ‘Yes’- This will cause epic fail. Want to go out to eat? Yes. Want to go to the movies? Yes. Want to meet for coffee? Yes. Want to have cocktails after work? Yes. With your new budgeting lifestyle you’ll have to say no more often and/or get creative. Want to go out to eat? I do, but it’s not in my budget. Want to go to the movies? Sure, your RedBox or mine? Want to meet for coffee? Sure! (take your home-brewed coffee or fill up your coffee mug at the office). Saying “Yes” too much is especially a common budging mistake for singles (Read more tips for singles here)
What epic budgeting mistakes have you made? Your mistake might help someone else win financially. See you in the comments.
Photo by: Denis Dore Photography (Creative Commons)
[This is part of my How to Budget Like a Pro blog series]
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