5 Common Budgeting Mistakes
So you finally decided to make a budget. Good for you. Many people never make a budget, and then wonder what happened to their money at the end of the year. Below are some of the more common budgeting errors that I have come across.
1. Budgets are not one size fits all.
Your budget needs to be updated for each month. You are not going to have the same expenses for everything every month. For example, shocker...Christmas is in December. If you have the same budget in place for December as you do for March then you will not have any money in place for Christmas shopping. Setting up a budget for each month will help you keep track of the "unexpected expenses" (like school starting in September.
2. Credit Cards are not a bridge for short falls in the budget.
When establishing your budget, when the money's gone, it is gone. There will be times when someone won't get paid. That is the fact of living beyond your means. You need to figure out where the leak is in your budget, and plug it. Don't use a credit card, and expect next month to be better. You know it will likely not be better, and now you have added the credit card payment to your already overtaxed budget. (Starbucks, eating out, and frivolous clothes shopping are typically some of the main budget busters).
3. Your budget priorities are upside down.
Pay yourself first, then everyone else.
How do you pay yourself? Simple, put the away in savings and leave it there! The next question I get is why would I do that when I have bills to pay? This too is a simple answer. You have to pay yourself as well, so why are you not doing that? Having paid yourself first, when a true emergency, or budget shortfall comes up, you have something in the bank to cover it.
4. You forgot is not an excuse.
We have all done it. We forgot Valentine's Day is in February, a birthday for a loved one, or Thanksgiving is in November. We know these things are coming and we should be budgeting for them. We don't know when the car is going to break down. We don't know when the kids might need to go to the doctor. So we need to budget for these things. Leave yourself a funds for these types of things so you don't pull out that dreaded credit card.
5. You can't always work more.
Saying you can put it on payments, or "90 days same as cash" doesn't work. You will not pay it off in 90 days, and you will be hit with all the back interest. So that amazing deal you could not pass up, has now cost you 5 times more than you should have paid for that item in the first place. There will ALWAYS be another sale. There will always make another one if it is the last one on the shelf. If they don't, then perhaps you didn't NEED that item in the first place.