Regardless of your age or expenses, it’s important to stick to a budget so you’re always aware of your financial stability.
According to USNews.com, “Budgets can be a great tool to help you achieve your financial goals. But if you approach budgeting the wrong way, it can lead to frustration, stress and even more spending.”
Keep reading for five of the most common budgeting mistakes and the steps you can take to avoid them.
1. Not Using A Budgeting Tool That Works (For You)
Use the tools that work best for you. Whether you rely on a notebook and a pen to track your personal expenses or use an elaborate spreadsheet, there is no right or wrong tool. Find a system that works for you, and keep with it.
Try getting your family involved in the budgeting process. Here are some ideas to make it a fun activity everyone can do together.
2. Setting Financial Goals You Can’t Reach
Don’t set goals you can’t reach. Setting unreasonable goals will make maintaining a budget much more difficult, and you’ll be more inclined to give up if you don’t reach them.
Be sure to allow room for fun and for unexpected expenses. If you have debt you’re trying to pay down, be realistic about how much you can devote to your debt each month.
3. Not Planning Ahead for Your Financial Future
Plan ahead for periodic expenses. Annual and semiannual bills such as insurance or taxes can be detrimental to a budget if you don’t plan for them.
The best way to prepare for these bills is to add up the total annual cost of your periodic expenses and divide it by 12 so you can save that amount each month. This way, when those bills arrive, you have the money saved to pay them.
4. Not Using Automatic Bill Pay Services
Take advantage of automatic bill pay. Using an automatic bill pay feature can do worlds of good for your budget.
Consider using a credit card to pay bills so you can also track your expenses automatically; a cash-back credit card offers the added perk of earning extra cash each month. Just be sure to pay off your credit card bill in full each month.
5. Giving Up if You Make Mistakes
Don’t throw in the towel if you make mistakes. Making mistakes is inevitable when you’re trying to manage your money.
Whether you splurge on something you shouldn’t have or you forget about an expense, address the problem and continue with your budgeting.
Additional Budgeting Tips
Budgeting will help you keep more money in your pocket and give you a bigger picture of your spending. Here are a few additional pointers when it comes to keeping a budget:
Include every expense in your budget
Those little expenses, such as your daily coffee, can add up quickly and take a big chunk out of your available spending money.
Contribute to your savings
Don’t simply put into savings whatever spare change is left over after your monthly bills are accounted for — or worse, ignore your savings altogether. Your savings is important for both your financial future and any unexpected emergencies.
Start Budgeting With This Easy Budget Calculator
If you’re ready to put these tips to work and get started budgeting today, check out our Home Budget Calculator. Our easy tool will help get you begin creating a monthly budget. All you have to do is enter your income and monthly expenses, and the home budget calculator tool will do the rest.
Speak to a Financial Advisor if You Need Help With Your Budget
If you have questions about creating a budget or managing your finances, Minster Bank’s financial professionals are here to help. Just give us a call at your preferred Minster Bank location, and we’ll help you set up a plan for your financial future.
Published by Minster Bank
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