We all make mistakes from time to time, even if you are a budgeting veteran. The best way to avoid mistakes is to know what are the pitfalls and try to avoid them.
Below is a list of budgeting mistakes to avoid:
You will never be able to budget if you don’t keep track of your expenses. You should be keeping track of every single purchase and with smartphones it should not be too difficult. Just take a photo of the receipt as soon as you make a purchase. But it makes no sense to take a photo of a receipt if you don’t record it. Make it a routine to reconcile your expenses at the end of every day. Just log all your expenses in your budget.
2. Impulse Buying
A budget can show you how much you can spend but it cannot stop you from spending beyond your means. Impulse buying can easily ruin your budget. If you are an impulse buyer, then it may mean that you have to change your spending habits.
3. Not Budgeting for the Unexpected
Always build a buffer in your budget. Budgeting for unexpected expenses will help you be prepared should you need to spend extra. This will also help you keep your budget on track as you won’t have to suddenly start looking for cut expenses in other parts of the budget. Build an emergency expense category in your budget.
4. Setting Unrealistic Goals
Nothing destroys a budget than setting unrealistic goals. You are doomed to fail if you set yourself goals that are impossible to achieve. Don’t set a budget so tight that it makes you miserable. Add a little extra for some fun in your budget. If you don’t leave a little room for yourself to have a little fun once in a while, then you will hate budgeting and it could lead you to abandon budgeting altogether. Don’t make your budget too rigid.
5. Not fixing your budget
You will not achieve everything you budget for. There will be times when you will deviate from your budget. It is a huge mistake to not recognize that your budget did not work. Figure out what happened and what can you do differently. Once you have figured it out, fix your budget.
6. Using the same budget every month
Setting an identical budget every month is a mistake. Circumstances may change from month to month, you may need to budget for a budget, vacation, holidays, increases in utility bills in winter. Be ready to make changes to your budget every month, make sure it is always up to date.
7. Not Budgeting
This is an obvious mistake but your financial situation will never improve if you don’t budget. If you don’t make an effort to create a budget, you will not move forward. Make an effort and start budgeting as soon as possible.