Top 5 Budgeting Mistakes

Budgeting is hard! Everyone who has a budget can relate to this feeling. Regardless of how hard you try, there is always something hindering your progress. If you were to think through your most recent struggles, what would they be? Like so many others, you are probably making some of the same mistakes when it comes to budgeting without knowing it.

5 Budgeting Mistakes

Having a frugal lifestyle does not have to suck the life out of you.

Yes, you have a strict budget you are trying to live within. However, often we have to break our budget to have fun. It has become a restraint to our lives because we forgot to budget in one of the most important items, LIFE. You need to set aside some “Fun” money every month. This is going to now be built into your budget to allow you the enjoyment of living your life, and to no longer need to break the budget.

Estimating what your expenses are every month will lead to failure.

Yes, you might be new to budgeting. In which case, you are estimating values to create a budget. However, once you have a month of expenses, you should be able to appropriately hone in on the exact dollar figure. Do not attempt to estimate a budget with $100 towards cell phone service if it is actually $120. Your budget will always be incorrect. Make sure your priorities are in order and understand your NEEDS from your WANTS. There is a fine line between a need and a want. Our needs should be included in the budget as regular expenses (I.e. food, gas, clothes, etc.). Our wants are those items which we can easily go without. Unfortunately, many of us classify wants as needs interchangeably. In which case, your “needs” become too expensive for your budget.

Not having an emergency fund.

An emergency fund is created for the exact purpose for which it is named. Having an emergency fund provides a cushion for your expenses when something big comes up. Instead, most of us use credit cards to pay for these instances. With an emergency fund, you can pay for the incident easily. After it has passed, you can begin to reimburse your savings over time.

Constructing your budget poorly or not having one.

This is one of the biggest mistakes to makes. Budgeting is one of the quintessential aspects of controlling your personal finances. Without a budget, you are living from one financial event to another. All of your money is essentially in a big savings account for which you dip into as you need it. However, what happens when the account is empty? Having a budget will solve this issue. If you haven’t taken the time to set up a budget, start today!