3 Mistakes to Avoid for Beginner Budgeters
So you want to get serious about your money?
Hallelujah! I can help.
It all starts with a budget. The 4 letter word of the money world. If you’ve never been a budgeter, then it can seem impossible. Never fear, it’s easier than it seems!
Avoid these mistakes to create a realistic budget and stick to it!
I have seen it: people start with their monthly income, subtract their bills, then divide the rest of the money between the categories that are left. But they have NO IDEA whether those caps are realistic. They may go to the store and realize their food budget will be gone after one trip. Or that they feel very confined by their budget, start to feel deprived and anxious and then give up.
A good budget always starts with your month before. Use your online banking, an app, or a pile of receipts and a spreadsheet, and analyze your previous spending so you don’t budget $300 for food when you can’t possibly feel satisfied on less than $500. It also helps a lot to look ahead at the next month for things like birthdays or holidays or even taxes to adjust your expenses and avoid buying a present at the last minute.
No backup plan
Each month has the ability to cost more or less than you planned. And more often than not, people get going on a budget, build some momentum, them BAM get hit with some big expense and ruin their budget--deflating some of their confidence.
Always have a plan to either cut spending, pull from a savings account, or have something to liquify quickly so that big, sudden expenses like car repairs or a kitchen appliance going out won’t ruin your budget for the month.
I highly recommend holding an emergency savings account, separate from all other accounts, to save you the headache of having to come up with quick cash.
I see a lot of people who think that a budget is meant to be extinguished each month, but that’s the mindset of someone who is bad with money. You want to view your budget a sum that you definitely don’t want to exceed, but also not a goal to meet. It's always the goal to have some money left over at the end of each month.
View your budget like a fence, use it as a tool that gives you guidance and freedom, to keep you safe. But you also don’t want to overuse your resources.
A good budget has to be well planned. Start by reviewing spending in the month before and looking for expenses in the month ahead. To stick to your budget, you have to have some type of backup plan. And you want to have the mindset of exploring your budget, within reason. Leftover cash is always the goal!
Do you have any mistakes to add? Comment below.