Your ultimate goal is saving, and we get that. But constructing and following a prepared budget doesn’t come naturally to everyone.
Budgeting can quickly become overly complicated, and it’s easy to make mistakes while attempting to avoid any and all oversights. These are the most commonly-made mistakes you could make on your budget this year that could potentially end up costing you thousands.
Not Sticking to a Solid Written Budget
The biggest mistake you can make is not following your written budget. Too often, if you’re not used to prioritizing organization, you may forget to update your budget and stick with it beyond the first few weeks.
Set up small rewards for yourself to aid in remembering to stick to your budget, set tiny financial goals to hit within a certain time period, and never forget your reasons for sticking to a budget in the first place.
Setting Unrealistic Goals
We all want to go on a long, luxurious vacation to a tropical paradise, and we might tell ourselves that we’ll have the funds saved up by next week, but that doesn’t always happen.
A key to a successful budget is setting realistic goals, and making sure your funds are evenly distributed over your highest priorities.
Avoid overspending and expecting to have your missing funds back swiftly. Life is unpredictable, and setting intense financial goals can not only end in disappointment, but a wrecked budget before the year is anywhere close to being up.
Forgetting To Save for Emergencies
Saving for the basics is a no-brainer, but how often do you budget for extra emergencies?
It’s essential to expect the unexpected, and tailor your budget to fit your life and the risks that might come along with it. If you live somewhere commonly affected by natural disasters, it may benefit you to save for emergency evacuation expenses and disaster-related medical bills in addition to your base emergency fund.
Another emergency seldom budgeted for are bouts of unemployment. In addition to general savings, it’s wise to set aside a small amount of funds to keep you afloat during times of unforeseen lack of income.
Not Tracking Your Spending
Do you treat yourself to a fancy drink at StarBucks or a quick meal at your favorite fast food joint and justify it by telling yourself that it’s such a tiny amount of money that you’ll never miss it? That is a slippery slope that leads to nickel-and-diming your budget to ruins – but only if you forget to log them.
Forgetting to track your spending can allow all your tiny, seemingly insignificant purchases to pile up into the hundreds, and wreck your savings before you even become aware of the problem.
Track your spending as closely as possible, log receipts from your day trips, and ensure that you have the funds to pay for small purchases before you make them to avoid putting your credit at risk alongside your carefully calculated budget.
Misplaced Priorities
It’s great to chase your dreams, but important to ensure that you’re funding the most pressing aspects of your life first.
Vacation funds and sections of your budget dedicated to nights out should not be a higher priority than the section of your budget for basic bills.
Re-examine your priorities, track how they change from month-to-month, and stick to your list of top priorities when paying off debts and replenishing funds during each pay period.
Don’t Put the “Budge” in Budget
Sticking with your budget and staying dedicated to your own goals and boundaries is a sure-fire way to protect your savings, your credit, and aid in improving your financial status in the future.
As long as you work hard to avoid commonly-made budgeting mistakes and mishaps, you should be well on your way to a hefty savings account and a budget that would be the envy of well-organized accountants everywhere.
